According to data compiled by Stateline, the daily news service of the Pew Center on the States, California is dead last among all the states for its awful handling of state finances, based on a compilation of credit rating history from Standard & Poor’s.
The credit rating agencies that include Standard & Poor’s rightly received huge steaming heaps of scorn for their lack of oversight leading into the financial crisis that we all continue to suffer from.
But the credit rating assigned to a state directly affects that state’s ability to fund construction projects by selling bonds — the most recently approved example is the high-speed rail.
A- doesn’t sound so bad, eh? And that’s up from BBB 2003!
That California’s credit rating is currently A- means that the state will have to pay a higher interest rate. The money to pay that higher interest rate comes out of the pocket of California taxpayers.
The highest possible rating from Standard & Poor’s is AAA. States currently with that rating: Alaska, Delaware, Florida, Georgia, Indiana, Iowa, Maryland, Missouri, Nebrask, North Carolina, Utah, Virginia and Wyoming.
No other state is rated A-.
Illinois is rated A+!
Stateline offers a lame explanation for California’s poor performance: “California has struggled to balance its budget since strict tax limits began in 1978.”
Translated, that means “California’s state legislators have refused to rein in spending to match state revenues at the expressed demand of the voters.”
Related articles
- S&P issues warning on California finances (latimesblogs.latimes.com)
- Budget culprit is California tax code, ratings agency says (latimesblogs.latimes.com)
- San Bernardino becomes third California city in 2 weeks to file for bankruptcy – Economic Times (economictimes.indiatimes.com)
- San Bernardino Third Cali. City to Seek Bankruptcy – Businessweek (businessweek.com)
- California’s Municipal Bankruptcies Sign of Stigma Waning – Bloomberg (bloomberg.com)
- California Mess Worsens (blogs.the-american-interest.com)
About the Author
I truly hope no one is surprised at this.
[...] California ranks dead last among all states for its awful financial management [...]
“… ‘California has struggled to balance its budget since strict tax limits began in 1978.’
Translated, that means ‘California’s state legislators have refused to rein in spending to match state revenues at the expressed demand of the voters.’ ”
No, it actually doesn’t even thought you would like to spin it that way. If you read “Anatomy Of A State Budget Deficit: California’s $15.7 Billion Problem” by S&P, it is clear that restrictions on our budget and taxes have constrained our ability to deal with our budget in fluid ways.
I realize that California’s budget is tied in knots, with revenue sliced up into a skillion different buckets rather than a single bucket that the legislature can ladle out simply.
But.
A huge amount of the blame for the existence of those skillion buckets falls again on the state legislature, which either created buckets on its own or had buckets forced on them in an effort to keep sticky fingers off.
The California State Legislature cannot dance away from its responsibility by whining that its job is tough, or that nobody will like them if they make the hard choices.