Well, nicer anyway. Standard & Poor's upgraded California's general obligation bond rating from A-minus to A, which is still two grades below top notch but certainly an improvement from the past few years. A higher rating means having to pay less to borrow money. The upgrade makes Illinois the worst-rated state for general obligation bonds. Actually, this had been in the works for some time: Last year S&P noted the state's improving finances, the result of a better economy (more rich people shelling out more in taxes) and greater restraint on spending. Not much discussion on what would happen if the economy went south and those rich people made a lot less money and wound up paying a lot less in taxes. That, of course, is what helped propel California into its most recent fiscal crisis. From Capitol Alert:
State Treasurer Bill Lockyer Lockyer praised state leaders and voters for their actions. But he also warned that the state faces "substantial long-term liabilities" and needs a "more stable tax system." He did not specify which long-term liabilities he meant, but Brown and the Legislative Analyst's Office have pointed to pension funding shortfalls and unfunded public retiree health care costs as problems that must be addressed.
January was an unusually strong month for revenue collection. More from CA:
California income tax revenues are notoriously difficult to predict in any year, but a mix of rare state and federal tax changes that affect top earners has complicated this particular tax season. The LAO believes that three factors could be at play: 1) The prospect of higher 2013 federal tax rates prompted top earners to take more capital gains and dividends in 2012; 2) a retroactive state income tax hike prompted wealthy earners to pay the state earlier than expected; and 3) the economy improved more than the experts predicted.