LOS ANGELES -- California Treasurer Kathleen Brown this week warned that the state's triple-A bond rating may be downgraded if state leaders do not call a special session to address the state's projected $3 billion budget gap.
Ms. Brown cautioned on Tuesday at the Sacramento Press Club that California's bond rating is in "serious jeopardy" and said lawmakers should meet and take action on the state's economic problems. The legislature is in recess and will return in January.
She said the state's triple-A rating is imperiled because of a recession-related budget shoftfall caused by a lower-than-expected sales tax collections. The treasurer added that the state is "taxed to the max," but she did not proposed specific spending cuts.
Rating analysts from Standard & Poor's Corp. are scheduled to visit Sacramento in early December for a routine update of the state's finances. Steven Zimmermann, a senior vice president at Standard & Poor's, said calling a special session would be a "good move."
Both Standard & Poor's Corp. and Moody's Investors Service have said California may lost its triple-A rating if new budget problems are not addressed promptly.
Gov. Wilson has said he is considering a special session but is waiting for top lawmakers to discuss the issue. A session can be called by the governor or by the two top legislators. One such lawmakers, Assembly Speaker Willie Brown, D-San Francisco, has said he favors a meeting in mid-December.
Bill Livingstone, a spokesman for the governor, said a special session would not be a "magic wand" to solve problems, and that the governor is already meeting daily with the state finance director on budget issues.
At least one Sacramento insider is skeptical about the chances for a special session.
"If S&P said, 'You guys are now double-A,' sure, they'd be back," said a senior consultant for one lawmker. "But right now they are playing politics."
Gov. Wilson plans to meet with "leaders in Washington "early next week to discuss the negative fiscal impacts of federal mandates on the state, Mr. Livingstone said.
In her speech, Ms. Brown, who is reported to be a possible candidate for governor, attacked President Bush for "economic indifference" to California's most severe recession in decades.
"In my judgment, this administration is guilty at best of economic indifference. At worst, it is an administration that is guilty of economic incompetence. They have adopted a hands-off policy with respect to economic issues," Ms. Brown said.