S&P Downgrades Pa. Credit As Budget Standoff Continues

Kristen Gonzales
September 22, 2017

The credit rating agency Standard and Poor's lowered its rating on Pennsylvania's debt, citing the state's stubborn post-recession deficit and its history of late budgets, as well as Standard and Poor's belief that the pattern could continue.

"The downgrade largely reflects the commonwealth's chronic structural imbalance dating back almost a decade, a history of late budget adoption and our opinion that this pattern could continue", S&P analyst Carol Spain said in a statement.

The change puts Pennsylvania's credit rating firmly within the bottom five in the country.

This plan came out of the state Senate, voted for by 75 percent of Senate Democrats and a handful of Republicans, in name only, backed by Wolf. "I have said repeatedly for three years that we must responsibly fund the budget with recurring revenues", he said.

The Senate will take up a house proposal that was passed lat week, which would take money from PennDOT and the E.P.A's coffers that are not being used.

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The Senate plan would also borrow $1.2 billion against anticipated payments to the Tobacco Settlement Fund to pay off last year's deficit.

Wolf, who allowed the imbalanced budget to pass without a signature, vowed on Monday that legislatures would agree on a spending plan before October 1. Perhaps the clanging of the sword will awaken the many responsible Republican legislators in both the House and Senate and lead them to demand serious action to resolve the budget crisis quickly and reasonably. "We would be using a significant amount of one-time funds to balance a 2.2 billion dollar hole".

In response to the downgrade today, Wolf called for swift action to complete the state budget. Their letter said further borrowing "creates an economic "moral hazard" that effectively increases the long-term risks to the commonwealth's finances" and that they were therefore "disinclined to support additional lending" to the state's General Fund.

"If an agreement has not progressed by next week", the governor's statement said, "I will be forced to take further steps to manage this situation". That means counting on another expansion of casino-style gambling in the nation's No. 2 commercial casino state, an expansion that lawmakers haven't even approved.

Other reports by TheSundaySentinel

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