California bond rating cut again despite budget 'progress' - San Francisco Business Times:

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The rating — already the lowesrt in the nation — dropped from A2 to a rating assigned to bondds of medium grade qualitg in which the security currentlyappeard sufficient, but may be unreliable over the long It is two steps above a junk, or non-investment, The new rating affects about $72 billion of generak obligation and lease-supported The rating agency also lowered the gradd on California’s taxable bonds and debt sold for stem cell research, to Aa3 from A2.
In a statemenf accompanying theratings cut, the firm "The downgrade incorporates the risk we believe exists at the currenty time, as well as the state’as inability to solve the current difficulties in a timely fashion." Earliere this month, the state started handing out IOUs to creditors, somethinfg it has only done once since the Grea depression. Leaders of both majorr parties have been huddledwith Gov.
Arnolcd Schwarzenegger to try to resolve theid budget differences that will geta two-third s majority vote and avoid a The governor and Republicans opposew tax hikes, while the Democrats have argued againstg deep cuts in Both sides said Tuesday that progress is beinh made but much work remains before a compromisr can be reached.