Standard and Poor's Ratings Services raised on Monday its rating outlook on California's general obligation debt to positive from stable, citing the state's improved finances.
"Gov. Arnold Schwarzenegger's fiscal 2008 revised May budget proposal reflects a positive budgetary basis balance at fiscal year-end despite a large general fund balance drawdown. A structural deficit remains, although slightly smaller than the fiscal 2007 figure," S&P said in a statement.
S&P ratings analyst David Hitchcock held out the possibility the firm could raise its rating on California's general obligation debt from its current "A-plus" rating, depending on the outcome of budget talks in the state's legislature over a spending plan for the state's next fiscal year starting July 1.
