S&P raises rating on big part of state’s debt

SACRAMENTO — A top bond-rating agency has raised its assessment of more than $80 billion worth of California’s debt, saying “the upgrades ref lect our view of California’s improved fiscal condition.”

Standard & Poor’s on Thursday hiked its evaluation of a big part of California’s long-term debt one notch to A from A minus.

The state’s new rating is the second worst among the 50 states, ahead of only Illinois.

S&P analyst Gabriel Petek said the new rating follows Gov. Jerry Brown’s recently proposed balanced budget as well as spending cuts and voter approval in November of a $6-billion tax increase.

The California upgrade is the first by S&P since May 2006, before the Great Recession of 2007-09, the state treasurer’s office said.

The new rating is a reward for California’s effort to make “a tough climb out of the hole,” said state Treasurer Bill Lockyer. He credited Brown and state legislators for making “decisions that have been tough and painful but correct.”

The higher rating should benefit California taxpayers by lowering the state’s borrowing costs when it sells bonds this spring, Lockyer spokesman Tom Dresslar said.

Although S&P cited California for improvements in its finances, the full analysis showed that the state has a long way to go before it regains the top AAA rating it last enjoyed in 1986.