California's finance officials are aiming to reassure the municipal debt market in anticipation of having to sell up to $9 billion in short-term debt after a budget is approved.
But Wall Street has its doubts. "Absent a credible budget revision package, we believe the state may suffer insufficient investor confidence in its finances to successfully place such an offering," rating agency Standard & Poor's said on Wednesday.
S&P also warned that if California's budget is not settled soon, the state's A-credit rating, already the lowest of any of the 50 states, is at risk of falling.
State Treasurer Bill Lockyer's office now doubts it will be able to sell short-term revenue anticipation notes (RANs) for state cash-flow needs as it had planned because of the budget turmoil. Revenue anticipation warrants remain an option, but would be more expensive for the state.
"We're exploring a variety of avenues to increase the potential market for our short-term cash-flow borrowing," Lockyer spokesman Tom Dresslar said. "The way the fiscal picture looks at this time, RANs do not look likely."


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