The Standard and Poor's rating agency likes most of what it sees in the new California state budget. But S&P analyst Gabriel Petek said the spending plan takes a step backwards by not paying down as much debt as Governor Jerry Brown originally proposed.
"If they use the excess revenue to pay off the existing debt burden, that would probably be beneficial for the state's credit rating," Petek said.
The governor had called for diverting $650 million more to pay down what he has called the "Wall of Debt." But he compromised with legislative Democrats by diverting that money to help pay for his overhaul of the state's education funding system instead.
S&P raised its credit rating for California from an "A-" to an "A" after Brown's January budget proposal showed a surprise surplus.
