We're No. 49!
After being stuck in the ratings basement since 2009, California's credit rating now ranks better than that of Illinois, according to Moody's Investors Service. Illinois was slapped with an A2 rating last week, worse than California's A1. Moody's penalized Illinois for unresolved pension liabilities and delayed payments.
"The downgrade of the state's long-term debt follows a legislative session in which the state took no steps to implement lasting solutions to its severe pension under-funding or to its chronic bill payment delays," Moody's wrote in its announcement. "Failure to address these challenges undermines near- to intermediate-term prospects for fiscal recovery."
California still ranks worst in the nation according to the two other major agencies, Standard & Poor's and Fitch Ratings. Though S&P kept California's rating at A- last year, it improved the state's outlook to "stable" from "negative" after the state enacted an on-time budget, cause enough for Gov. Jerry Brown to celebrate.
California starts this budget cycle facing a $9.2 billion deficit, $4.1 billion of which is because that June spending plan fell out of whack.
"It's not exactly cause to throw confetti from the top floor of our office here, but I think we can take heart from fact that California's credit standing in the market unquestionably has improved in the last year," said Tom Dresslar, spokesman for state Treasurer Bill Lockyer, of the climb out of the Moody's basement. "California cash borrowing notes received higher ratings last year, and all three of the major agencies have expressed more positive views about our credit worthiness."