S&P downgrades Pennsylvania credit to A-plus, cites budget problems

Posted September 22, 2017

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.

S&P Global Ratings downgraded Pennsylvania's credit rating Wednesday, citing a history of late budgets.

Lawmakers authorized almost $32 billion in spending on June 30 and have grappled ever since with how to fully fund it.

The House Republican revenue bill, which passed by a 103-91 vote last week, would cover Pennsylvania's budget hole through a variety of measures that do not involve raising taxes.

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

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. "We would be using a significant amount of one-time funds to balance a 2.2 billion dollar hole".

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. And then, the House passed a plan that not only raided special funds, but included other phantom revenues from liquor and gaming legislation that has not been, and most likely will not be enacted, phantom revenues from unspecified lapsed funds, and phantom revenues from a proposal that was rejected by the courts previous year.

The House plan - developed largely by rank-and-file Republicans, including several midstate lawmakers - relies on $630 million in special fund transfers from state funds with excess or dormant monies.

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

"The Senate understood the need for urgency and acted responsibly in July to fully fund the budget and enact recurring revenues to eliminate the deficit, and my administration has tried for weeks to hold off a downgrade. If an agreement has not progressed by next week, I will be forced to take further steps to manage this situation". Tell your state senator to support the House plan to restore fiscal sanity to Pennsylvania.

Without a plan to close the $2.3-billion budget gap for fiscal 2018 in place, the two said lending to the state, under the current political climate, would be an economic "moral hazard" that would increase long-term risk.

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