L.A. County runs a pretty tight financial ship, but the state budget crisis has caused S&P to cut the rating on $1.1 billion in short-term notes that the county plans to sell this week. The tax-free yields will probably run between 0.45 percent and 0.6 percent. Before the downgrade they were looking at as little as 0.4 percent. From Tom Petruno at Money & Co.:

S&P said it was concerned about possible state welfare-funding cuts that could boost the county's own welfare outlays by more $400 million a year. Glenn Byers, assistant treasurer for the county, said S&P's assessment was a "worst case" scenario, and that it was wrong to assume the county wouldn't pare back spending to counter whatever hit it takes from the state's cuts.