(Harrisburg) -- Credit agency Fitch Ratings is downgrading Pennsylvania's $10.9 billion in outstanding general obligation debt because it says policymakers haven't adequately addressed rising costs that are outpacing tax collections.
The downgrade comes three years after Fitch Ratings put Pennsylvania on a negative outlook. The downgrade takes Pennsylvania from AA-plus to AA.
Fitch Ratings cites state government's failure to boost funding for public employee pensions obligations and its lack of a cash reserve. The ratings agency says that signals an inability or unwillingness on the part of political leaders to make difficult fiscal decisions.
Governor Corbett's proposal to cut future pension benefits of current employees by $12 billion over 30 years collapsed in the Legislature. The current budget is draining the state's cash reserve and cutting business taxes.
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