Recovery May Be A Tough Sell

When State Treasurer Kathleen Brown visits the big three bond-rating agencies this week in New York, her task will be to put the best possible face on California's fiscal situation.

But some Wall Streeters question how well Brown can defend a state budget plan that she has already publicly criticized as irresponsible.

And as a probable Democratic contender for Gov. Pete Wilson's job in the 1994 election, Brown could be better-served politically if the state's credit rating deteriorates further. In theory, Wilson would get the blame--and Brown then could make a campaign issue of the bond rating, vowing to restore California to AAA status if elected.

Of course, Brown is far too professional, and politically savvy, to be blatantly downbeat with the rating agencies. As treasurer, part of her job is to get the lowest possible interest rate when the state borrows money. The higher the state's credit rating, the lower its interest costs.

"I don't feel that she's ever come into these meetings with a negative attitude," said an executive at one of the big three rating agencies, who asked for anonymity.

Brown wasn't available over the weekend to discuss her strategy for this week's meetings. But she is likely to be quizzed about her May 31 column in The Times, in which she criticized the outline of Wilson's budget, arguing that the plan continues a "dangerous addiction to rolling deficits and short-term borrowing."

While Wilson agreed to only a six-month extension of the "temporary" half-cent sales tax--of which voters will decide the fate--Brown wanted a three-year extension of the tax, to get rid of the state's carry-over deficit.

However Brown defends Wilson's budget, her opposition to key elements of it places her in a no-lose position politically: If the state's credit rating is lowered again, she can essentially say, "I told you so," while pledging to make the best of it.

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