For a while we were neck-and-neck with Louisiana, but California can now lay claim to the worst credit rating of all 50 states. Citing the budget impasse, S&P lowered the rating on the state’s $46 billion in general obligation bonds to "A" from "A-plus." Most states are rated either "AA" or "AAA." S&P added that in spite of California having strong, long-term fundamentals, "we judge prospects for an imminent or brisk economic and revenue recovery to be unlikely." From Tom Petruno's Money & Co.:

Despite its money woes, California can't arbitrarily decide to default on its debts; the state Constitution mandates that debt principal and interest must be paid as promised. But a lower credit rating can lead investors to demand higher interest rates on new bonds the state sells for infrastructure projects, or on short-term debt issued for cash management purposes.