April 23, 2018

PA S&P rating drops amid budget issues

22 September 2017, 12:49 | Franklin Nunez

As the budget stalemate continues feuds over spending plans have become increasingly regional and personal. Gov. Tom Wolf Flickr

As the budget stalemate continues feuds over spending plans have become increasingly regional and personal

Governor Tom Wolf has warned about it for months...and now, Standard and Poor's has downgraded Pennsylvania's credit as the state's budget remains unbalanced.

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.

Wolf praised the Senate, saying it acted responsibly by funding the budget with "recurring revenues to eliminate the deficit", presumably referring to the chamber's 26-24 vote July 27 that included taxes on utility bills and a severance tax on natural gas extracted from the Marcellus shale. 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.

In response to the downgrade today, Wolf called for swift action to complete the state budget. 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 a year ago.

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.

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

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Let's break down the current budget tale.

The credit rating agency Standard and Poor's lowered its rating on Wednesday to an "A+'".

"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.

Unfortunately, like it or not, fair taxation is the only realistic, reliable and stable method to balance a government budget. Neither has a say in approving the state budget.

"In reaching a final resolution, the budget must be balanced for this year and next", leaders said in a statement.

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

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