Pennsylvania Credit Rating Takes Hit After Budget Standoff

Pennsylvania Credit Rating Takes Hit After Budget Standoff

Pennsylvania Credit Rating Takes Hit After Budget Standoff

"The decision by Standard & Poor's to downgrade Pennsylvania's credit rating should come as no surprise".

S&P's report cites a litany of concerns about Pennsylvania's finances, including a almost decade-old structural deficit, habitually late budgets, and recent failures to make mandatory payments on time.

With the lower rating, Pennsylvania is now among the bottom five states rated by Standard and Poor's. The current budget noncrisis concerns only the general fund budget at $32 billion.

On Wednesday, the Senate voted 43-7 to non-concur the revenue plan created by House Republicans and to create a conference committee to create a new plan. "I have said repeatedly for three years that we must responsibly fund the budget with recurring revenues", he said.

The downgrade is the second by Standard and Poor's in three years - the previous one was under Wolf's Republican predecessor - as budget-makers have struggled to pull Pennsylvania out of a long-running deficit.

House and Senate leaders seem to agree any revenue package can rely on at least $200 million in one-time license fees from what they call "gaming".

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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.

The House rejected any sort of tax increase when it passed its plan.

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.

"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". Let the governor know you noticed his lack of responsibility in crafting a responsible budget while those who owed tax payments continued to meet their obligations on time. 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.

House Democratic Leader Frank Dermody of Allegheny County called today's news a blow to the state's fiscal standing, but also an opportunity for everyone to get back to work on a "real budget solution".

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