PA Credit Rating Cut
Standard & Poorâ€™s on Wednesday lowered Pennsylvaniaâ€™s bond rating to A-plus, a drop from AA-minus, 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 fiscal year 2017-18 that did not have enough revenue to cover expenditures. The state Legislature and the governor, who did not veto the bill, are to blame.
Whatâ€™s worse, the governor has failed to take remedial actions to freeze pay and/or order layoffs across commonwealth 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 where residents are leaving because of the complete lack of fiscal responsibility. Politicians no doubt are hoping to call on the federal government to throw them a life line.
Good luck with that.
Pennsyslvania has allowed its poor choices regarding public-sector pensions and its inability to do much of anything 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 and anti-private-sector-driven economy mentality that pervades much of the electorate and its chosen representatives are deterrents to strong growth in jobs, income and the commonwealthâ€™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.
Jake Haulk, Ph.D., is president of the Allegheny Institute for Public Policy ([email protected]).