Posted on 07/06/2009 2:37:44 PM PDT by rabscuttle385
Fitch Ratings cut California's long-term general obligation bond rating by two notches to BBB, the second cut on the rating since late June, based on the state's inability to achieve an agreement on its budget and cash flow solutions amid its severe financial crisis.
Legislators in the state have been deadlocked for more than a month on ways to close what is now a $26 billion deficit in a $92 billion general-fund budget. The state plans to issue a little over $3 billion in IOUs to thousands of creditors this month after lawmakers failed to come to an agreement on a way to close the massive budget deficit.
Republican Gov. Arnold Schwarzenegger and Democrats, who control the legislature, have been locked into a battle as to how to fix the state's budget problems. Schwarzenegger has sought deep cuts and some so-called revenue accelerations, while Democrats countered with a $21 billion proposal that includes $11 billion of cuts and relies more heavily on accounting gimmicks and one-time fixes.
Fitch also kept the ratings on watch for downgrade, after an agreement wasn't reached by the end of the state's fiscal year on June 30. The ratings short-term risk includes concerns that if gridlock between politicians continues, it would further aggravate the state's already severe economic, revenue and liquidity challenges and weigh on the state's credit.
The BBB rating, which is two notches above junk territory, indicates Fitch's view that default risk remains low, although the rating is well below that of most other tax-supported issuers. A handful of the state's appropriation bonds were downgraded to BBB- and put on watch for downgrade, including some building and financial authorities.
(Excerpt) Read more at online.wsj.com ...
Eferyvon vill get rich, Ja! Und zen vee vill haf da perfect ekonomy, Ja! No more taxes und unlimited goferment spending, Ja?! Das perfect velt!
Corrupt money? ;-)
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.