PA S&P rating drops amid budget issues

PA S&P rating drops amid budget issues

S&P's downgrade puts renewed pressure on the legislature and Governor Tom Wolf to reach a budget deal, and work to fix the structural deficit Pennsylvania has faced.

S&P Global Ratings took Pennsylvania from AA-, a rating it had shared with sister states like California and MI, down to A+.

"Today's news should be a wake-up call to come together and end this now", he said.

"I just learned that we have a credit downgrade that I have been spending three months to try and say, 'lets get this done, '" said Governor Wolf.

The commonwealth has relied too heavily on one-time revenue sources, limiting its available cash and leading to late or canceled payments, S&P said. "The highest current rating is "AAA" is held by 14 states, while the lowest rating is 'BBB" held by IL.

S&P fired a warning shot on July 6, putting the commonwealth's GOs on credit watch with negative implications.

"This year, even as the sword of a credit downgrade was hanging over the heads of the taxpayers of the state who will bear the burden of the increased taxes at every level of government from school districts and municipalities to counties to the entire state, Speaker Turzai ignored the danger".

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Hiesinger said, adding that both companies shared the same philosophy of corporate responsibility towards employees and society. The deal will require approval of Thyssenkrupp's supervisory board, Tata Steel's board of directors and European regulators.

"We view it as possible that lawmakers could fail to reach a compromise" by then, Spain said.

Pennsylvania becomes the fourth state with at least one rating below the AA category, said Alan Schankel, a managing director with Janney Capital Markets.

According to Spain, the new rating also reflects Pennsylvania's weakening liquidity, notably the delay or nonpayment of scheduled expenses for the first time. "Do ongoing revenues meet ongoing expenditures?"

There has been no legislative movement since on the budget, and Senate leaders have signaled that they can not accept the House's proposal. Wolf wants higher taxes on home heating gas, cellphone bills, etc.

The House and Senate are divided over whether to raise taxes as lawmakers look to borrow $1 billion or more to help bail the state out of a $2.2 billion projected deficit. 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.

Last Friday, as Pennsylvania's fund balance neared zero, he held back roughly $1.2 billion in payments to Medicaid program providers.

He also said he had spoken on the phone earlier in the week with S&P representatives and that he came away with the sense that the state could push off that day of reckoning until next month. Everyone is going to pay more interest.

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