California, whose state budget is highly dependent on volatile income taxes, is the least able big state to withstand a recession, according to a “stress test” conducted by Moody’s Investor Service.
Arch-rival Texas, meanwhile, scores the highest on the test because of “lower revenue volatility, healthier reserves relative to a potential revenue decline scenario and greater revenue and spending flexibility,” Moody’s, a major credit rating organization, says.
Among major states, New York, Pennsylvania and Florida fall somewhere between California and Texas.
Moody’s report could help Gov. Jerry Brown this year as he resists pressure from fellow Democrats in the Legislature to increase spending, particularly for health, social and pre-school services, and pump more revenue into a “rainy day fund” that voters, at his behest, created in 2014.
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