Ratings agency says California bond outlook stable

By JUDY LIN | July 7, 2011 | 4:14 PM EDT

SACRAMENTO, Calif. (AP) — One of the nation's leading bond-rating agencies has upgraded its outlook for California's finances after Gov. Jerry Brown signed a rare on-time budget in time for the start of the new fiscal year.

Standard & Poor's on Thursday revised California's long-term ratings outlook from negative to stable.

The agency says most of the provisions of the new budget are largely realistic, although it says California's longer-term financial prospects depend on a continuing rise in tax revenue, primarily from the wealthy.

State treasurer's spokesman Tom Dresslar says the ratings improvement confirms the budget takes a significant step forward in putting California's fiscal house back in order.

He says a stable outlook should help the state get better interest rates when it borrows about $5 billion in short-term loans next month.