BLOG: Financial Crisis Coming to Pennsylvania, Warns Another Financial Institution
By: Jeff Sheridan, Press Secretary
March 24, 2016
Governor Wolf announced yesterday that he would allow the general appropriations and non-preferred appropriations bills sent to him by Republicans to become law, as is, without his signature. The governor believes it is time to move on from the protracted 2015-16 budget impasse and this will allow funding to go out to schools and other services in the short term, but we still face enormous problems that this budget does not even pretend to address.
The math in the Republican budget still does not work and the massive multi-billion dollar deficit is left unaddressed.
S&P, Fitch and Moody’s along with the Independent Fiscal Office have all sounded the alarm and warned of the consequences of not addressing the commonwealth’s massive deficit.
And today, less than a day after the governor announced he would let the Republican budget become law, PNC put out a notice warning that Pennsylvania’s credit rating could still be downgraded. According to PNC, “It is possible Pennsylvania’s general obligation (GO) ratings could be downgraded in the near term, even though the governor allowed the Republican budget to become law.”
PNC went on to say: “There is nothing that has occurred in recent weeks or months that leads us to believe the spending plan will begin to put Pennsylvania back on a path to structural balance. We do not expect the budget to come close to solving Pennsylvania’s fiscal pressures, including its structural budget gap, which is sizeable and growing. Without broader policy changes, Pennsylvania’s structural deficit will worsen.”
PNC also pointed out that S&P recently noted: “[I]f the legislature and governor do not enact a fiscal 2016 budget that addresses the structural balance by the end of the March sessions, we will likely lower the rating… Rating-related announcements and/or moves from other rating agencies are also possible in the near term, as both Moody’s and Fitch continue to follow developments and analyze this news.”
Credit rating downgrades are only part of the devastation we are facing as we head toward Pennsylvania’s fiscal cliff. If we continue to ignore the fiscal reality that is a multi-billion dollar deficit, the commonwealth will plummet over the cliff and we will be forced to make drastic cuts to schools and human services, and school districts will be forced to increase already too-high property taxes for middle-class families and senior citizens. It is long past time to face this reality and balance our budget with real, sustainable revenues.
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