Credit Rating Cut for PA
On September 20, S and P lowered PA’s bond rating to A+, a drop from AA- taking it to the third lowest rating of all states except Illinois and New Jersey. This has happened because of the irresponsible enactment of a spending bill for FY 2017-18 that did not have enough revenue to cover expenditures. The legislature and the governor who did not veto the bill are to blame for this.
What’s worse, the governor has failed to take remedial actions to freeze pay and/or order layoffs across state departments.
Spending has continued at the elevated pace called for in the spending bill, no employee has a missed a paycheck or had benefits reduced. Indeed, pay raises and the attendant benefit costs have gone into effect.
To be ranked anywhere close to Illinois is a sad occurrence. That state is swimming in deficits with $16 billion in unpaid bills. Illinois is taxing businesses and citizens to the point that people are heading out because of the complete lack of fiscal responsibility. Politicians are no doubt hoping to call on the federal government to throw them a life line. Good luck with that.
PA has allowed its poor choices regarding public sector pensions and it inability to do much to curb the growth in required outlays to cripple the state financially. Public sector unions with the right to strike are anathema to good governance or a healthy private sector. Prevailing wage laws raise the cost of public construction well above what it should be. Binding arbitration rules that substantially favor unions have contributed as well.
And finally, the anti-free market, private sector driven economy mentality that pervades much of the electorate and their chosen representatives are deterrents to strong growth in jobs, income and the state’s tax base.
This all fits together. Voracious appetites for spending and economy strangling policies and taxes combine to keep revenue growth anemic creating perpetual budget crises. Nor will this situation be remedied any time soon, if ever.