HARRISBURG, Pa. (KDKA) – Standard & Poor’s has downgraded Pennsylvania’s credit rating.
“Standard & Poor’s lowered the rating to A+ from AA-, largely to reflect what we view as a chronic structural imbalance,” S&P Global Ratings analyst Carol Spain told KDKA money editor Jon Delano on Monday.
KDKA’s Lisa Washington Reports —
Spain, who wrote the report, says the A+ rating is the third worst rating of a state, exceeded only by New Jersey and Illinois.
“Over the past nearly a decade the state has relied on one-time revenue or non-recurring resources to balance the budget,” said Spain. “And while we think that the budget gaps have been of a manageable size, the repeated use of these one-time sources has led to a weaker financial position for the state.”
S&P does not prescribe what should be done, but cutting spending for programs and/or raising taxes or fees is preferable than one-time revenue hits that won’t solve the long-term structural deficit.
“We think that the Commonwealth could face a budget gap again next year given reliance on one-time measures to close the budget gap,” noted Spain.
Governor Tom Wolf said the legislature must enact recurring revenues, like a tax on Marcellus shale natural gas, adding, “We must reach an immediate resolution to the budget, and today’s news should be a wake-up call to come together and end this now.”
PA state Treasurer Joe Torsella called the downgrade an embarrassment to lawmakers and costly to taxpayers when the state borrows money.
“That’s going to be an additional, these are all estimates, probably an additional $3 million or so in costs to the taxpayers from that rating,” says Torsella.