Printer Friendly

MOODY'S CONFIRMS Aa RATING ON STATE OF CALIFORNIA GENERAL OBLIGATION BONDS

 MOODY'S CONFIRMS Aa RATING ON STATE OF CALIFORNIA
 GENERAL OBLIGATION BONDS
 NEW YORK, Oct. 9 /PRNewswire/ -- Moody's Investors Service today confirmed the Aa rating on the general obligations of the State of California in conjunction with the planned Oct. 14 competitive sale of $1.3 billion in Various Purpose General Obligation Bonds.
 Confirmation of the Aa rating on the general obligations of the State of California is based on the depth and diversity of the state's economy, its moderate debt levels, and the initial steps taken in its two most recent budgets towards addressing financial imbalance. The rating was revised downward to Aa from Aaa in two steps in February and July to reflect the impact of the weakening economy on finances and the breakdown and delay in the budget and cash flow management process. In addition, the expectation of continuing financial stress over the near term is reflected in the MIG2 rating to the April and May maturities of the fiscal 1992-93 Revenues Anticipation Notes, as compared to the MIG1 ratings assigned to such note offerings in previous years.
 The State of California has now been struggling with the fiscal and economic impact of the recession for over two years. On Sept. 2, 1992, two months into the fiscal year, the state finally enacted a budget for the 1992-93 fiscal year, the second budget in which the state has had to make major adjustments to realign spending and revenue. The budget is again expected to fall out of balance before the end of the fiscal year as a result of continued revenue weakening. Nevertheless, the state made inroads towards correcting it's budget imbalance problem, and set the stage for continued reassessment and decision making regarding the level and allocation of state spending, and the tolerance for taxes to support that spending.
 The extreme difficulty in arriving at budget solutions in California, however, has reflected political as much as economic obstacles. Little consensus regarding the priorities and scale of state government is apparent within the state's diverse and rapidly growing population, and constitutional constraints enacted by initiative frame much of the budget debate. This struggle is expected to continue for several years in light of the poor economic outlook and the degree of expenditure pressure.
 To balance the 1992-93 budget given the decision to minimize reliance on revenue side solutions, the magnitude of expenditure adjustment needed was substantial. The scope of difficult cuts enacted this year, together with those of last year's budget compromise, shows a willingness to manage spending down to levels the state can afford. For the first time, total budgeted expenditures are actually lower, by 5.2 percent, than the prior year's level, a significant accomplishment given rates of growth in school enrollment, population, social service caseload, and prison populations. To accomplish this result, major spending programs were cut in absolute terms and the rate of growth was constrained in others. The spending categories that produce the greatest expected savings through actual year-over-year reductions in spending are local government funding, higher education, and health and welfare, although nearly every broad category of state spending other than education declines. Additional expenditure reduction actions, while extremely difficult, are still available.
 The reliance on spending cuts in the 1993 budget reflects the political infeasibility of tax increases during an election year, policy decisions regarding the potential economic damage of tax increases in the depths of a recession, and the budget actions of the previous year, which relied on a combination of tax increases and spending actions. However, even after the 1992 tax increases, the overall state and local tax burden in California remains average among the states. The longer term capacity to consider revenue measures, should expense side solutions become too onerous, also exists. The confirmation of the Aa rating embodies the expectation that, as in the fiscal 1992 and 1993 budgets, the state will continue making meaningful progress towards financial balance in the face of persistent economic stagnation.
 General obligation bonds outstanding, including current offering: $16,960,305,000 (includes self liquidating debt of $4,494,135,000).
 -0- 10/9/92
 /CONTACT: George Leung, vice president/managing director, 212-553-0342, or Renee Boicourt, vice president, 212-553-7162, or James Dearborn, assistant vice president, 212-553-1910, all of Moody's/ CO: State of California ST: California IN: SU: RTG


LR-OS -- NY060 -- 8457 10/09/92 15:37 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Oct 9, 1992
Words:725
Previous Article:HURRICANE RECOVERY CENTER HIGHLIGHTS UNION SUPPORT FOR VICTIMS; CWA, AT&T PARTNERSHIP PART OF NATIONWIDE CWA EFFORT
Next Article:HEALTH IMAGES, INC. CONTINUES SHARE REPURCHASE


Related Articles
MOODY'S CONFIRMS Aa RATING FOR STATE OF OREGON GENERAL OBLIGATIONS
MOODY'S CONFIRMS 'Aa' RATING FOR FLORIDA GENERAL OBLIGATION BONDS
MOODY'S CONFIRMS 'Aa' RATING FOR FLORIDA GENERAL OBLIGATION BONDS
MOODY'S CONFIRMS 'Aa' RATING FOR CONNECTICUT GENERAL OBLIGATION BONDS
MOODY'S CONFIRMS Aa RATING FOR CONNECTICUT GENERAL OBLIGATION BONDS
MOODY'S CONFIRMS STATE OF MINNESOTA'S Aa GENERAL OBLIGATION BOND RATING DIVERSE ECONOMIC BASE AND SOUND FINANCIAL RECORD CITED;
MOODY'S LOWERS STATE OF CALIFORNIA GENERAL OBLIGATION BOND RATING TO 'Aa' FROM 'Aa1'; LEASE-SUPPORTED RATINGS REVISED FROM 'Aa' TO 'A1'
MOODY'S CONFIRMS RATING ON THE CITY OF LOS ANGELES, CALIFORNIA GENERAL OBLIGATION BONDS AT AAA JUDGMENT OBLIGATION BONDS RATED AA1
MOODY'S CONFIRMS AA RATING ON STATE OF OREGON GENERAL OBLIGATION BONDS
MOODY'S LOWERS ILLINOIS GENERAL OBLIGATION BOND RATING FROM 'AA1' TO 'AA'; ASSIGNS 'MIG 1' RATING TO CERTIFICATES OF AUGUST 1992

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters