California Turns Corner With Upgrade as Pensions Choke Illinois
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California’s first credit upgrade in six years shows how curbs on pension costs, a voter-backed tax boost and an improving economy have allowed it to exit Wall Street’s basement, leaving Illinois as the lowest-rated state.
The higher rating by Standard & Poor’s marks a turnaround for California, which has the world’s ninth-largest economy and was once seen as ungovernable as it faced unrelenting budget gaps and issued IOUs to pay bills. Yesterday’s change came less than a week after Illinois had its score lowered, prompting officials to postpone a $500 million bond issue.