Carol Carlile washes dishes outside her tent in Sacramento, California

By JULIET WILLIAMS SACRAMENTO, Calif. (AP) — Gov. Arnold Schwarzenegger told state employee unions Tuesday his administration would cut another 2,000 jobs to help close California’s $26.3 billion budget deficit. Meanwhile, Moody’s Investor Services downgraded California bonds to near-junk status, from A2 to Baa1, and placed the state’s credit rating on watch for possible further reductions. Moody’s said the budget deadlock had put constitutionally required payments to bond holders at risk. “If the state gets to a position where it is unable to make priority payments, a multi-notch downgrade may result,” Moody’s said in a statement. The state’s cash crisis has forced state Controller John Chiang to issue nearly 130,000 IOUs worth a total of $436 million to state vendors so far. The administration previously sent layoff notices to 4,600 state employees, but it was unclear how many workers will actually lose their jobs because many still have an opportunity to move into special-fund posts that weren’t covered by the layoffs. …

Moody’s downgrades status of California bonds

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