Moody’s Investors Service Wednesday affirmed its A1 rating on $90 billion of California general obligation bonds.

Among the states, only Illinois GO bonds are rated lower than California by Moody’s.

“A volatile tax revenue structure and governance issues, particularly restrictions placed on the Legislature in the budgeting process and a reluctance to build reserves during the last recovery, have made it difficult for the state to address economic and revenue downturns,” Moody’s said in its report.

The rating agency said a weak economic recovery may mean California’s financial problems will continue.

However, Moody’s said the long-term economic prospects for the state are good while its long-term debts are “moderate compared to many other states.”

Analysts also noted that the California Legislature’s ability to pass on-time budgets may signal a shift in its ability to overcome political problems to close deficits without a delay.

The rating agency said it will keep the state’s outlook at stable as it is expected the state will be able to deal with future fiscal problems without facing major crisis.

At the end of June, Gov. Jerry Brown signed $91.3 billion general-fund spending plan that closed an estimated $15.7 billion deficit.

The budget relies on voter approval of a tax initiative in November to raise an estimated $5.5 billion of revenue.

The measure would temporarily increase California’s sales tax by a quarter-cent and raise taxes on income starting at $250,000.

If that fails, the axe will fall on education through “trigger cuts.”

Standard & Poor’s and Fitch Ratings both rate California’s GO bonds A-minus, two notches lower than Moody’s. S&P has a positive outlook on the state, while Fitch has it at stable.

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