A new report from the ratings agency Standard & Poor’s credits California’s financial turnaround more to budget cuts than to tax increases.
“A significant amount of the correction has taken place on the expenditure baseline, even more than the perhaps more high-profile revenue improvements related to Prop 30 and the strong stock market performance,” says S&P’s Gabe Petek, who wrote the report.
Gov. Jerry Brown’s Department of Finance says it believes all three factors led to California’s stronger fiscal health.
S&P also says the state budget is still vulnerable to the next economic downturn. And it says putting more money into health and social services programs, as urged by some Democratic lawmakers and outside groups, could hurt the state’s bottom line.