Standard & Poor's, a major credit rating organization, praised Gov. Jerry Brown's revised 2014-15 budget Thursday, but warned the Legislature not to go beyond the budget and spend higher revenue estimates from its budget analyst.
Using the Legislative Analyst's Office revenue projections that are several billion dollars higher than Brown's "for the purposes of increasing ongoing spending", S&P said in a report, "could endanger our current and positive rating outlook."
The Legislature, however, appears to be doing exactly that this week as its budget subcommittees vote to increase spending on education and health and welfare services, based on the LAO's projection. However, the final budget will be negotiated by Brown and legislative leaders.
Overall, S&P said, Brown's budget "is continued good news for California's credit quality" and praises Brown and the Legislature for asking voters to create a "rainy-day fund" to absorb some revenues and save them for revenue downturns.
However, it notes that the budget does not address some major issues, such as unfunded liabilities for state retiree health care.
PHOTO: Gov. Jerry Brown holds up poster boards with graphic information regarding revisions to his budget, specifically related to his projected increase in spending on health care and teacher pensions during a press conference at the state Capitol on Tuesday, May 13, 2014 in Sacramento, Calif. The Sacramento Bee/Randy Pench