FW Rank: 50

1992 Rank: 46

Population: 30.4 million

Moody's bond rating: Aa

Standard & Poor's bond rating: A+

Governor: Pete Wilson, Republican

Legislature: Democratic majority in House and Senate

-- Ranking pluses: Good infrastructure controls; very well funded pensions; governor has proposed strong performance measurement system to be tested in four pilot agencies.

-- Ranking minuses: Revenues have fallen far short of estimates for current and two previous years; expenditure/revenue imbalance; accumulated deficit at end of fiscal 1992 pegged at $3.3 billion by controller; dependence on short-term fixes in current year; underestimation of Medicaid spending; fiscal 1993 budget was a record 64 days late; "seriously dysfunctional" workload-based measurement system, according to governor's 1993-94 budget summary; long preparation time for annual report and very few copies published; no comprehensive annual financial report; declining bond ratings.

-- Comments: Most populous state plummets to No. 50 with huge deficits, subpar financial reporting and problematic performance measurements. As long as money rolled in, mandates for spending and tax limitations weren't so troublesome. Now with economy sliding downhill, so many chickens have come home to roost that California is up to its neck in feathers. One big question mark is governor's proposed budget: Over $1 billion is supposedly coming from Uncle Sam, much of which will likely not make it to the state. Otherwise, proposals are a solid step to getting state back on firm ground. Governor gets big credit for attempts to introduce solid performance measurement system to state. The absence of such measures contributed to the state's current problems. What will the legislature do? Stay tuned.

Source: "The State of the States," Financial World Magazine, May 11, 1993 (Vol. 161, No. 10); New York, NY.