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S&P Boosts California’s Credit Outlook (But Not Its Rating)

Aired 2/14/12 on KPBS News.

California is getting some love this Valentine’s Day from the ratings agency Standard & Poor’s. The agency is upgrading the state’s credit outlook from “stable” to “positive.”

California is getting some love this Valentine’s Day from the ratings agency Standard & Poor’s. The agency is upgrading the state’s credit outlook from “stable” to “positive.”

That’s NOT the same as the state’s credit rating, which remains an A-, the lowest of the 50 states. But S&P analyst Gabriel Petek said a positive outlook means there’s a one-in-three chance the state’s credit rating will go up. “We think there have been some developments that position the state to be in a stronger position than it is currently at some point in the next two years," said Petek.

Petek said two major factors led to the positive outlook: the spending cuts in the most recent state budget and the decreased chances of a stalemate under the state’s new majority-vote budget process.

Governor Jerry Brown took credit for the news and called it a “powerful vote of confidence in our state.” But Senate Republican Leader Bob Huff said it’s no wonder California’s credit rating is unchanged because the state still hasn’t fixed its structural deficit.

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