CA may get worst credit rating

January 22, 2009 5:23:26 PM PST
Key state leaders are met behind closed doors on Thursday to discuss the state's budget crisis. The so-called Big Five, the governor and the top two Republican and Democratic lawmakers hashed it out.

After three hours of meetings, still leaders have not produced any results. There are great concequences to the state if leaders cannot come up with a budget compromise by the end of the month, and those leaders are certainly feeling the pressure.

With state leaders back from the Inauguration and other political events, it's back to job one -- the budget crisis.

It's day 78 of the stalemate and the pressure is really mounting. February 1st is when California cannot pay all of its bills. Only an agreement can prevent what Governor Schwarzenegger has called "financial Armageddon."

A lot is at stake for government services and the people who run them.

"The pressure should be on. The pressure should be on. And if they can't solve it, they ought to be ashamed of themselves," said Yvonne Walker, the state worker union president.

The squeeze is coming from as far as the East Coast. Wall Street is threatening to give California the worst credit rating of any state in the country because of its budget mess.

Bond money is what finances most of the state's public works projects.

A downgrade from Moody's would hamper the state's ability to borrow that money and would signal to investors the Golden State is a shaky investment.

"In a soccer match, referees carry two cards. One's a yellow card which is a warning, and the second one is a red card, which is an expulsion. What Moody's did by this action is basically pull a yellow card on the state of California," said H.D. Palmer, from the California Finance Department.

Closer to home, Republicans are feeling the heat too and are now finally saying the T-word -- taxes. If they can get permanent state spending restraints, some are willing to buck their "No New Taxes" pledge in order to stop California from going into insolvency.

"I'm not going to let people get IOUs instead of tax refunds. Having people in old age homes being kicked out, having school doors closed, and having state workers laid off by the thousands because we decided to do nothing. Now is the time for action, and we have to step up and do what's right," said Assembly member Anthony Adams (R) from Hesperia.

The Big Five meets again on Friday. That will make it a week before possible chaos will happen. The state has never been in this situation before so it is unclear exactly what will happen.


Load Comments