SAN FRANCISCO (Reuters) - California, which is struggling to close a $24.3 billion budget gap, faces the prospect of a "multi-notch" downgrade in its credit rating if the state's legislature fails to act quickly to produce a budget, Moody's Investors Service warned on Friday.

Moody's decision to place California's general obligation debt on alert for a possible "multi-notch" downgrade stunned state officials.

Let us hope "stunned" is typical overblown Reuterspeak. 

Well — now what, California Senator Boxer? I know you and California Senator Feinstein are busy being all important and federal and whatnot, but are either one of you going to weigh in on the brokeification of California by your peers and fellow Democrats?

What's that? I can't hear you over the chirruping of the crickets.

The state's current A2 credit rating is Moody's sixth-highest investment grade

"sixth-highest"? That doesn't sound so bad— oh:

...and makes California the lowest rated of the 50 states.

The A2 rating is ...five notches above speculative status and Moody's raised the potential for the rating to tumble toward "junk" status if lawmakers fail to quickly produce a budget for Governor Arnold Schwarzenegger to sign.

"If the legislature does not take action quickly, the state's cash situation will deteriorate to the point where the controller will have to delay most non-priority payments in July," Moody's said in a statement.

"Lack of action could result in a multi-notch downgrade," Moody's added.

...Moody's cited California's expected massive budget gap for fiscal 2010 of more than 20 percent of its general fund budget...

20 percent! YOU HEAR THAT, MASSACHUSETTS? [sings] "WE ARE THE CHAMP-YONS! WE ARE THE CHAMP-YONS!"

Standard & Poor's on Monday placed California on review for a possible downgrade, also citing concerns about the state's fiscal stress.

The once-greatest state, ranked favorably among the top ten Nations in Economic Strength, reduced to this. Thanks a lot, Sacramento.

And don't blame Arnold. It's on the heads of the legislators.