Standard & Poor’s revised California’s credit outlook from negative to stable today — a rare bit of good news in an otherwise grim state budget season.
The revision comes just days after California passed its first on-time budget in 10 years. The $129.5 billion spending agreement relies on economic improvement and spending cuts to close a projected $26.6 billion budget shortfall. The deal also includes triggers for additional cuts if the economy does not improve.
The ratings agency cited an improved balance between state revenue and spending as the primary reason for raising California’s outlook.
“There is a possibility down the road for a higher rating,” S&P credit analyst Gabriel Petek told Reuters. “I think that it would be somewhat contingent on the state following through, if the revenues don’t materialise, and successfully implementing the cuts that they have included in this budget.”
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