CALIFORNIA'S credit rating will be lowered unless Gov. Pete Wilson and the Legislature act quickly to reduce a projected $1.8 billion budget deficit this year. The leading rating agency, Standard & Poor's Corp., said it would evaluate the state's budgetary action preceding its formal revenue estimate in May, and could downgrade California's top AAA rating. A lower rating translates into higher interest ratings when Sacramento sells bonds to finance projects such as schools, highways, and prisons.
Standard and Poor's said that Governor Wilson had offered few proposals to reduce this year's expected gap between revenues and expenditures, but noted his spending plan called for changes ``that could contribute to budgetary balance'' in 1992 and beyond.
Wilson's finance director, Tom Hayes, said he disagreed with Standard & Poor's action, but promised that the administration would act to retain the top credit rating. Treasurer Kathleen Brown, who is responsible for issuing state bonds, also called for greater action to cut the projected shortfall.
Financially troubled Massachusetts has a BB rating, the lowest of any state. California is one of nine states with the coveted AAA rating.
Neither of the other two major rating agencies, Moody's and Fitch, has acted to alter California's top rating.
When Wilson was sworn in Jan. 7, he inherited an economy hit by revenue shortfalls, greater than expected expenditures for health and social services, and greater numbers in in schools and prisons.
The Wilson administration estimated a $7 billion gap between revenues and spending over the next 17 months, but legislative Analyst Elizabeth Hill put the shortfall at $9.9 billion.
The governor's initial budget proposal called for depleting the state's reserve and finishing the year with a deficit that would be made up next year.
S&P's action to place California debt on its credit watch list covers $11.6 billion in general obligation bonds and $3 million in debt issued by state agencies.