Money & Company
Tracking the market and economic trends that shape your finances.
July 7, 2011 | 1:10 pm

Standard & Poor’s has removed the immediate risk of a downgrade of California’s debt rating, saying the state’s plan to balance its budget was “largely realistic.”

S&P on Thursday raised its outlook for California’s rating to “stable” from “negative.” The rating, A-minus, still is the lowest of any of the 50 states.

“The negative outlook had been linked to the possibility of a recurring cash deficiency that we now believe the enactment of the fiscal 2012 budget is likely to mitigate for the most part,” S&P said in a report. “Because the state has improved the structural alignment between its recurring revenues and expenditures, we now view the state’s rating outlook as stable through the two-year outlook horizon.”

Capitol Importantly, the $129.5-billion budget deal reached by Gov. Jerry Brown and the Legislature will allow the state to issue so-called revenue anticipation notes later this summer, S&P said. California normally borrows billions of dollars via short-term notes in late summer or autumn to tide it over until tax revenue arrives the following spring.

Treasurer Bill Lockyer has said he plans to sell about $5 billion in notes sometime in August.

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