SAN FRANCISCO — Standard & Poor’s said its rating and outlook for California will not be impacted by the enactment of the state’s $91.3 billion general fund budget.

“Enacted on time and with solutions to the projected $15.7 billion deficit we consider realistic, the budget is generally consistent with our positive outlook,” said S&P analyst Gabriel Petek in a report released Friday.

In February, S&P raised its outlook for California’s A-minus credit rating to positive from stable, which Gov. Jerry Brown’s administration and lawmakers hailed as an example of progress on the budget.

Moody’s Investors Service rates California A1 and Fitch Ratings has it at A-minus, both with stable outlooks.

But during this year’s budget negotiations, the rating agency warned that the positive outlook could be put in jeopardy if solutions added by lawmakers to the governor’s spending plan proved not to be credible.

The ratings agency also said during the talks that a smaller reserve than the $1 billion proposed by the governor, which lawmakers at one time cut in half, could hurt the state’s credit. Using his line item veto, Brown increased the reserve to $948 million.

Petek said in his report Friday that cash flow would be especially important this year because so much hinges on a November tax initiative that seeks tax increases.

Whether the initiative passes, generating new revenue, or fails and triggers cuts, the impact will fall in the second half of the state’s fiscal year that ends June 30.

As a result, the S&P analyst said he expects a bigger cash-flow deficit this year that will require more borrowing.

Brown signed a $91.3 billion general-fund spending plan that closes the shortfall by making more than $8 billion in cuts, adding $6 billion of revenue — though that depends on voters approving the sales and income tax hikes in November — and leaving a $948 million reserve.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.