Citing recurring budget deficits coupled with growth in pension costs, Fitch dropped PA down to AA-, its fourth highest rating. This puts Pennsylvania in the bottom five of the 42 states the firm evaluates.
“Pennsylvania faces fiscal pressures in the form of a structurally unbalanced budget, depleted reserves and a rapidly growing pension cost burden following years of underfunding and market-driven investment declines,” Fitch analysts led by Eric Kim stated today.
Specifically, around $2 million or 7% of the commonwealth’s 29 billion dollar deficit depends on one time items, meaning they are non-recurring expenses.
According to Bloomberg, Pennsylvania’s deficit and unfunded pension burdens are now taking a larger hit on taxpayers, totalling 9.8% of their 2013 income.
Other major rating agency’s share similar concerns. Moody’s has downgraded PA twice in the past two years, the last occurring in July. Gubernatorial challenger Tom Wolf was quick to hit Governor Corbett on the downgrade, stating it’s a “verdict on the lack of management and leadership in Pennsylvania.”
Meanwhile, Corbett spokesman Jay Pagni said that this “underscores the need for pension reform.”
In April, Standard and Poor’s warned that it could also downgrade Pennsylvania from its AA if the state does not tackle its mounting financial problems.
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7 Responses
“FOUR downgrades in two years! What an economic juggernaut run by Tom Corbutt. This only substantiates the poor economic climate put forth by the Auditor General & Treasurer this past week. Time to replace one-term Tom”-Bono
Heck Bono we can always borrow more money and not pay our(pension) bills.
What really is remarkable about that sentence is that they lifted in out of the Bloomberg article, but they obviously wanted to change it enough that it wasn’t just cut and paste. Evey way that they edited it, however, made it factually inaccurate and grammatically incorrect.
Source material: “About 7 percent of the state’s $29 billion budget depends on one-time items, such as $125 million in savings from its federally approved alternative to Medicaid expansion, according to Fitch.”
Rewrite: “Specifically, around $2 million or 7% of the commonwealth’s 29 billion dollar deficit depends on one time items, meaning they are non-recurring expenses.”
They changed it to turn the word ‘budget’ into ‘deficit’, to take the appropriate hyphen out of ‘one-time’, etc. Truly amazing.
PS – I also love how they added the word ‘specifically’ to begin the sentence, while removing the example that had added to the specificity of the original text.
RJ’s comments below were made more than 12 hours ago, and there have still be no corrections to this article. PoliticsPA is slipping, big time.
Also that should say “nonrecurring revenues,” not expenses, but that’s probably too far over Nick’s head.
“Specifically, around $2 million or 7% of the commonwealth’s 29 billion dollar deficit depends on one time items, meaning they are non-recurring expenses.”
A few things wrong here:
-$2 million is not 7% of $29 billion.
-The state’s general fund budget is $29 billion, so if we have a $29 billion deficit, we’re really in trouble.
-Agency’s is not the plural of agency (try agencies)
Great little blog you have here. I smell a Pulitzer.
FOUR downgrades in two years! What an economic juggernaut run by Tom Corbutt. This only substantiates the poor economic climate put forth by the Auditor General & Treasurer this past week. Time to replace one-term Tom
This has NOTHING to do with slashing pensions for middle-class employees, and EVERYTHING to do with Corrupt Corbett paying off his Big Oil Campaign Bribers by not having a severance tax. Pa would be AAA-rated today if he hadn’t sold the state down the river to get elected and fund his personal retirement plans in South Carolina.