Post-Jerry Brown Budget, S&P Still Ranks Cali. Credit Lowest in Nation

Governor Brown has high hopes in line with his 2010 budget proposal. Those hopes may have been dashed by Standard & Poor’s dismal rating of the state’s credit – the lowest in the union.

Brown’s plan calls for around $12.5 billion in spending cuts, sadly being aimed at welfare programs and universities. Some $12 billion will be made with the extension of higher sales and income taxes, as well as higher vehicle registration fees. The scope of the general fund budget is $84.6 billion. The plan also assumes gross domestic growth of 2.2 percent for 2011 – below S&P’s 3 percent prognostication.

In a press release, S&P said roughly 75 percent of California’s budget fixes “have been temporary or did not materialize during the past three fiscal years. We believe the potential for multiyear improvement in the state’s budget position stems, in part, from reforming the way in which some $10 billion of governmental services are provided.”

However, S&P predicts that if the economy and employment rates beats the odds, California could begin to see a break. There is another spot of good news for fiscally-challenged California – their general-obligation bonds received a grade of A- from S&P, which is seventh best in the nation.