On Monday, Moody's, the Wall Street rating agency, said that while California's finances seem to be getting better, the improvement was still not enough to upgrade California's credit rating from "A1."

Moody's Investors Service also cautioned "that California's progress could easily stall given the state's roller-coaster reputation."

"The state's improving economy, combined with recent tax increases and spending controls, has put the state on a path to large surpluses, although one that is typical of the boom-and-bust revenue and economic cycles of California," Emily Raimes, Moody's vice president and senior credit officer, said in a statement.  

According to the Los Angeles Times, after Standard & Poor's upgraded California's finances last week, California is now in second-to-last place, just ahead of Illinois, when it comes to credit ratings. 

Bill Lockyer, the California state treasurer, said the decisions lawmakers have had to make were "tough and painful but correct."