Good News for the Golden State

California's Credit Rating has been raised, and that is good news for both the State and Governor Schwarzenegger.

Citing an "established trend of recovery," Moody's raised California's rating to A3 from Baa1, reversing a downgrade it made in December out of concern over continued political deadlock and a move by Schwarzenegger to cut car license fees.

Moody's rivals Standard & Poor's and Fitch Ratings said they want to see the budget that California lawmakers pass for the fiscal year starting in July before weighing ratings changes of their own.

Schwarzenegger, who has proposed a budget plan that would close a $14 billion budget gap without raising taxes, applauded Moody's: "Their financial analysts have had a chance to carefully review our revised budget and our economic outlook, and they've concluded that it warrants an improvement in California's standing in the nation's financial markets."

Moody's upgrade affects about $35 billion of outstanding general obligation bonds and nearly $9 billion of lease revenue bonds and enhanced tobacco bonds backed by the state's general fund. The upgrade was Moody's first since September 2000 for California's general obligation debt.

That is good news both for the Governor, who's approval ratings are pretty good right now, and it is also good news for President Bush. A Republican in the the Governor's seat who is doing well could translate into votes for Bush in California, especially since a recent poll showing Bush close to Kerry in California, that is bad news for Kerry. Others have suggested that Bush would do well to let Arnold campaign for him in California, and to focus his attention elsewhere. Still, it will be interesting to see how