California's Bond Rating Drops
There’s more fallout from California’s budget impasse. Fitch Ratings today cut the state’s bond rating by two notches. In a statement, Fitch blames the state’s budget impasse and cash flow problems for the downgrade.
Why does it matter? It means the state will like now pay a higher interest rate when it borrows money – just as a consumer would pay more on a mortgage or car loan if their credit score drops. HD Palmer is with the Department of Finance. He says it’s frustrating:
“If we’re forced to pay tens of millions of dollars, if not hundreds of millions of dollars in higher interest costs because we have a delayed budget, that’s tantamount to lighting money on fire," says Palmer. "That’s money that we could be spending on things like health care of education or resources.”
Palmer says the state’s rating is the lowest it’s been since 2003. In a statement, the Governor said the downgrade underscores the urgency of solving the entire deficit.
Lawmakers are still at an impasse over how to solve the $26 billion budget problem.