Pennsylvania Receives Long-Awaited Credit Downgrade

Posted September 22, 2017

Call your state senators and tell them to approve the state House's no-tax-increase plan.

Over the past week, Pennsylvania missed about $1.7 billion in medical reimbursement payments and another $581 million in pension-related bills, S&P noted. Instead, year after year, budgets passed with Republican majorities have been balanced with one-year revenues, phantom funds, and other budgetary gimmicks.

Wolf said he believes leaders of the House and Senate Republican majorities are on board with getting a deal done and signed by October 1, before Pennsylvania's battered credit rating gets another downgrade and he must delay more payments for lack of cash.

In response to the downgrade today, Wolf called for swift action to complete the state budget. If the General Assembly had enacted Governor Wolf's proposals in February 2017 to raise $1 billion from a severance tax on natural gas, corporate tax reform, and sales taxes on business-to-business purchases - none of which would place a severe burden on working and middle class Pennsylvanians - there would be no credit downgrade.

"We would still end up with a deficit at the end of the year", Corman said.

Senate GOP leaders responded by saying compromise must happen immediately and that they are standing behind the July budget package. But spending has declined as share of state GDP for the last five years, and the main reason for our structural deficit is cuts to corporate taxes and our upside-down tax system.

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

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

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. That means counting on another expansion of casino-style gambling in the nation's No. 2 commercial casino state, an expansion that lawmakers haven't even approved.

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.