Moody’s Lowers Pa. Debt Rating

Cites use of budget gimmicks, long-term problems with pension.

State Capitol in Harrisburg

The state’s fiscal rating has been cut.

Nobody liked the state’s new budget: Moody’s on Monday cut Pennsylvania’s debt rating to Aa3 — citing its disapproval of gimmicks used to balance that budget, as well as the continuing long-term specter of pension obligations hanging over the state’s financial future.




Reuters reports:

Moody's cited underperforming revenues and the continued use of one-time measures in its latest downgrade. After wrestling with lawmakers over public pensions and cutting millions of dollars through line-item vetoes, Pennsylvania Governor Tom Corbett didn't sign the 2015 budget until more than a week after the start of the new fiscal year on July 1.

The state has about $50 billion of unfunded long-term pension liabilities. About 63 cents of every new dollar of state revenue goes to pay pension costs, Corbett, a Republican, has said.

Moody's says it expects the state economy to grow slower than the U.S. economy overall, making the pension challenge tougher yet. The rating affects about $13 billion in state-issued debt.

Be respectful of our online community and contribute to an engaging conversation. We reserve the right to ban impersonators and remove comments that contain personal attacks, threats, or profanity, or are flat-out offensive. By posting here, you are permitting Philadelphia magazine and Metro Corp. to edit and republish your comment in all media.