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

22 September, 2017, 00:53 | Author: Wilson Dawson
  • Pa. Senate to Take Up House Revenue Proposal For Budget

If the General Assembly had enacted the modest personal income tax increase Governor Wolf proposed in February 2017, not only would the budget be balanced this year, but there would be nearly no carryover deficit from last year.

They said the Treasury should let the state keep spending despite the funding gap, because "revenue is still coming in".

"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.

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

The House rejected any sort of tax increase when it passed its plan. "We would be using a significant amount of one-time funds to balance a 2.2 billion dollar hole".

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. Governor Wolf and the Senate are at odds with the House on how to fully fund the budget that became law back in July, and reaction to the downgrade broke along those lines.

The credit rating agency Standard and Poor's lowered its rating on Wednesday to an "A+'. If an agreement has not progressed by next week, I will be forced to take further steps to manage this situation".

"As the Senate still has the option to concur in the House-passed fiscal code, the House, Senate and administration are working together to finalize the necessary components needed to support this year's budget", the leaders said. "What we've seen is that typically, the budgets are not balanced". "We need to plan responsibly today for a better tomorrow, understanding the far-reaching importance of the tough decisions that we have to make now".

House Republicans, however, pushed back on that concept and instead passed a revenue plan that relies heavily on what they call the $1 billion "sale" of a state "asset".

Wolf has said he expects there will be a compromise before the end of the month.


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