New budget spurs Standard & Poor's to upgrade California's credit rating

The Wall Street ratings agency Standard & Poor's gave a vote of confidence to California's finances on Thursday, upgrading its credit rating to its highest level in 14 years.

The state's new budget, which took effect Wednesday, "marks another step forward in the state's journey toward improved fiscal sustainability," said the agency's report.

The upgrade, from A+ to AA-, was welcomed by state officials.

“Our state has reached another important mile marker in its fiscal comeback," California Treasurer John Chiang said in a statement. 

Standard & Poor's was pleased that the new budget included more conservative revenue estimates developed by Gov. Jerry Brown's administration.

If the budget used higher expectations set by nonpartisan legislative analysts, the report said, "the state's fiscal position would have been more vulnerable during the next downturn."

Despite the boost, California's credit rating doesn't compare favorably to other states. It's tied for third to last, above only Illinois and New Jersey.

Follow @chrismegerian for more updates from Sacramento.

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