Ratings Agencies Take Dim View Of PA’s Fiscal Future
When the state’s finances are the subject of partisan debate, it helps to turn to the analyses of the ratings agencies that judge creditworthiness – and two of the three major credit ratings agencies are warning that Pennsylvania’s fiscal problems aren’t over, even if its budget impasse is.
S&P Ratings Services and Moody’s Investors Service both said Thursday that the Republican-crafted budget that’ll take effect this week is balanced, contrary to what Democratic Governor Tom Wolf has been saying. But the agencies note that the spending plan has been balanced using one-time funding sources that won’t be available next year. So when costs rise for pensions and other mandated spending and revenues don’t keep up, the commonwealth will face an even wider shortfall.
GOP Senate Majority Leader Jake Corman said Wednesday that Republicans do want to fix the structural deficit – they just don’t want to turn right to higher taxes to do it.
“Revenues will be a last resort for us,” said Corman. “We concur that there’s a structural deficit. But there are two ways to deal with a structural deficit. One is to reduce the spend. Two is to increase revenue. The governor’s been very clear that he wants to increase revenue. Our preferable approach is to reduce the spend.”
Democrats say the looming shortfall can’t be addressed with spending cuts alone – they say it requires new revenue sources -- namely tax hikes.
So, it would seem that the same dispute at the center of the last budget fight will also play a starring role in the next negotiation over the spending plan for the fiscal year starting July 1.
The report by S&P noted Pennsylvania’s “lack of political will” to solve its fiscal problems. Moody’s analysts said the conclusion of the nearly nine-month budget impasse “only brings to the fore a likely new stalemate.”