Standard & Poor’s said Tuesday that California’s ratings are at a “crossroad” because of the politics and potential impact of a budget impasse.

“We believe budget politics in California already impede the state’s long-term credit quality,” Standard & Poor’s analyst Gabriel Petek said in a report.

In the near term, the agency said the state’s credit quality is in jeopardy because a delayed balanced budget could stall its annual sale of $10 billion of revenue anticipation notes. The Ran sale usually occurs in the summer to help pay for operations and balance out tax revenues that come in stronger later in the year.

“The budget process is significant in California’s credit profile because if a budget is not adopted in time for the state to issue its [Rans] before its cash runs low, the state’s basic operating liquidity can become inadequate,” the report said.

Standard & Poor’s identified three possible outcomes for the budget situation and how they may impact the state’s rating.

If the budget delay leads to a cash crisis and relies on yet-unrealized revenues, payment deferrals and legally questionable maneuvers, such as the budget vetoed last week by Gov. Jerry Brown, it could lead to a downgrade, the agency said.

It said a structurally balanced budget that uses reoccurring revenues to fill deficits could result in revising the state’s outlook and even possibly raising its rating.

However, a budget that uses one-time fixes could affect the state’s Ran isuance and would likely preclude a rating improvement, Standard & Poor’s said.

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