Blame All Around for Pennsylvania's Credit Downgrade

Blame All Around for Pennsylvania's Credit Downgrade

The downgrade, which puts Pennsylvania debt four notches below S&P's AAA gold standard rating also reflects the state's weakening liquidity position, S&P said.

In a news release Wednesday, S&P credit analyst Carol Spain offered several reasons for the downgrade of Pennsylvania's credit rating one notch to A-plus: the state's chronic structural imbalance dating back almost a decade; a history of late budget adoption; and S&P's opinion that this pattern could continue.

With the lower rating, Pennsylvania is now among the bottom five states rated by Standard and Poor's.

Pennsylvania has been without an operational budget since June, when the Republicans adopted a bipartisan spending plan of almost $32.0 billion.

Wolf said Tuesday morning that he believes that leaders of the House and Senate Republican majorities are on board with getting a deal done and signed by October 1.

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Wolf has said he wants to get the budget done by October first.

The Senate has not yet taken action on the plan, while the state treasurer and auditor general have refused additional lending to the general fund. "We would be using a significant amount of one-time funds to balance a 2.2 billion dollar hole". But lawmakers have not yet agreed on how to pay for the budget and debt.

"We must reach an immediate resolution to the budget and today's news should be a wake-up call to come together and end this now".

"Meanwhile, the House Republicans were leading the way as they uncovered billions - yes, with a 'B"! - in extra funds.

The House rejected any sort of tax increase when it passed its plan. "If an agreement has not progressed by next week, I will be forced to take further steps to manage this situation". There was ample warning by S&P and other credit agencies, as well as by political observers including us at PBPC, that this would be the result of the continuing failure of Republicans in the General Assembly, and especially Speaker Turzai and his followers in the House, to raise sufficient recurring revenues to close state's long-term structural deficit. 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.

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