BLOG: S&P Threatens Pennsylvania With a Downgrade Due to Our Budget Deficit

first_img March 07, 2016 Budget News,  The Blog Last week, Standard and Poor’s Ratings Services cited Pennsylvania’s structural budget imbalance as the primary reason that the commonwealth’s AA-minus general obligation rating could be downgraded by the end of March.Governor Wolf has warned for years that Pennsylvania’s $2 billion plus budget deficit is a time bomb, ticking away. If it explodes, Pennsylvania will experience a fiscal catastrophe the likes of which we have never seen.Last week’s S&P downgrade warning is a stark reminder of the consequences of failing to address Pennsylvania’s budget deficit. It’s time to pass a budget that addresses the budget deficit and fully funds our schools and other key services.Key takeaways from the report:“We believe that the failure of lawmakers to agree on a complete budget package for fiscal 2016 in the coming weeks would impair their ability to address the projected fiscal 2017 budget gap in a timely manner. If the legislature and governor do not enact a fiscal 2016 budget that addresses structural balance by the end of the March sessions, we will likely lower the rating. On the other hand, if lawmakers do agree on a budget that addresses long-term structural balance in this timeframe, we could revise the outlook back to stable.”“The $30.3 billion budget passed by both the house and senate is, in our view, structurally unbalanced and does not include pension reforms negotiated in the previously agreed-on budget framework. As proposed, the budget had a $510 million budget gap for fiscal 2016 and left a $2.2 billion budget gap for fiscal 2017. It did not include a previously proposed revenue increase package and relies on $46.6 million of one-time revenues in fiscal 2016. Increases to basic education funding in House Bill 1460 were less than the budget compromise bill, and, when including cuts to school construction, it cut $95 million to education.”“In our view, the immediate credit concern is that failure to act in the current fiscal year could compound future fiscal gaps.” Read more posts about Governor Wolf’s 2016-17 budget.Like Governor Tom Wolf on Facebook: SHARE Email Facebook Twittercenter_img BLOG: S&P Threatens Pennsylvania With a Downgrade Due to Our Budget Deficit By: Jeffrey Sheridan, Press Secretarylast_img