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budgetsign.jpgFitch Ratings upgraded California's general obligation bond rating from A-minus to A on Monday, citing restrained spending in recent budget cycles and a reduction in budgetary debt.

Fitch's action follows a similar upgrade by the ratings house Standard & Poor's earlier this year.

"The upgrade is based on institutionalized changes to fiscal management in recent years, which combined with the ongoing economic and revenue recovery have enabled the state to materially improve its overall fiscal standing," Fitch said in a statement. "Notable progress includes timely, more structurally sound budgets, spending restraint, and sizable reductions in budgetary debt."

Fitch cheered deep spending cuts in recent budgets and "a restrained approach to restoring past cuts." However, the agency said California remains vulnerable to swings in personal income tax revenue and a lack of reserves.

"Although California's fiscal situation has improved significantly, Fitch views the state as being a long way from a full recovery from the effects of two fiscal crises over a little more than a decade," the agency said. "Budgetary borrowing in the form of deferrals, internal loans and deficit bonds will remain a drag on current resources for several years even under optimistic scenarios."

Fitch's action follows the passage this summer of a $96.3 billion state spending plan, in which revenue projections were a point of contention. Gov. Jerry Brown, a Democrat, persuaded lawmakers of his own party to adopt more moderate projections than they initially sought.

The governor took to Twitter following Fitch's announcement: "Today, Fitch raised California's credit rating - a further move toward greater fiscal stability."

PHOTO: Gov. Jerry Brown holds up a copy of the signed state budget at the Capitol on Thursday, June 27, 2013, in Sacramento as Assembly Speaker John A. Perez, D-Los Angeles, left, Senate President Pro Tem Darrell Steinberg, D-Sacramento, center, and Sen. Mark Leno, D-San Francisco, right, celebrate in the background. The Sacramento Bee/Lezlie Sterling



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