California has the worst credit rating of any state now and the nation's worst credit rating record over the past 11 years, according to a new nationwide compilation by the Pew Center on the States.
The compilation is based on Standard and Poor's credit ratings and covers every year since 2001. Thirteen states sit atop the Pew chart with AAA credit ratings while California is alone at the bottom at A-minus and is the only state to dip to the worst possible rating, BBB, during the 11-year period.
That happened in 2003, during a state budget crisis so severe that then-Gov. Gray Davis was recalled. The highest rating California achieved during the period, A-plus, came in 2006.
"The states with the lowest grades typically have trouble keeping their spending in line with their tax revenues." Pew's Stephen C. Fehr writes in an explanation of the research. That observation applies to California, which has struggled to balance its budget for the past decade and whose current budget assumes that voters will approve sales and income tax increases in November.
Credit ratings affect the interest that states and other public entities must pay on their bonds. California politicians have tended to downplay their significance, however, citing a provision of the state constitution that gives high priority to bond service, the state's unblemished record of making bond payments, and the apparent willingness of lenders to buy the state's debt offerings, albeit at somewhat higher interest rates than those paid by other states.
Four states - Missouri, North Carolina, Virginia and Utah - have held AAA credit ratings for 46 years or more, Pew noted.