Moody's Investors Service today (June 25) gave California its highest debt rating since 2001, boosting the rating from Aa3 to A1. Moody's rating is two steps higher than those given by Standard & Poor's and Fitch. The state's rating is equal with Connecticut and ahead of ailing Illinois and New Jersey, according to Bloomberg Businessweek.
The state's debt metrics are still high but declining, notes Moody's. "A surge in revenue, mostly from capital gains and temporary income and sales tax increases, has taken the state from a $25 billion deficit three years ago to a record surplus," says Bloomberg. The ratings boost could be an election year gift to governor Jerry Brown.