Moody's Investors Service on Wednesday upgraded its rating on California's general obligation debt to "Aa3" from "A1," citing the state's improving financial position and employment growth.
The one-notch upgrade stamps California GO debt with its highest rating from Moody's since 2001. That was when the dot-com bust hit the state's economy hard, prompting a series of credit downgrades from which it has been slow to recover due to years of chronic budget problems.
Moody's move comes just five days after Governor Jerry Brown signed a $156.3 billion budget for the next fiscal year, featuring an improved revenue outlook thanks to voter-approved tax increases and a recovering economy. When Brown, a Democrat, took office in 2011 from two-term Republican Arnold Schwarzenegger, the state faced an 18-month budget gap of $25 billion.