News

Wolf pushes credit rating issue in budget debate

Written by Ben Allen, General Assignment Reporter | Jul 21, 2015 4:07 AM
wolf_june2015.jpg

Photo by AP Photo/Matt Rourke

 

(Harrisburg) -- The budget stalemate is nearing its fourth week, and now, Governor Tom Wolf is pushing a different argument in the hopes of swaying public opinion.

Wolf is voicing concern about the state's credit rating.

It's been downgraded multiple times by rating agencies citing the state's recurring budget gaps, growing pension obligations, and short-term funding fixes.

A lower credit rating means borrowing money costs more.

The governor says he wants long-term solutions to the state's cash-flow problem, not one-time funding patches.

"That's a crisis that I'm focused on. And so I want to mitigate it to the extent possible, the short-term inconveniences of doing this, but I want to stand my ground and say we need a real budget."

Last month, Wolf vetoed a budget proposed by Republicans that included one-time funding sources.

"We're paying a penalty of about a point for a bad credit score. That's a $170 million in extra interest every year. That's $170 million we could be spending on education."

Wolf made his remarks on Radio PA's Ask the Governor program.

The last state budget, approved by Governor Corbett, also relied heavily on one-time funding.

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Comments: 4

  • Matthew J. Brouillette img 2015-07-21 08:45

    Unfortunately, Gov. Wolf fails to mention that every single downgrade cites pension liabilities as a major reason for our downgrade.

    Here's some information that would have been helpful to readers in understanding what is driving our poor credit ratings: http://www.commonwealthfoundation.org/policyblog/detail/wolf-wrong-about-pensions-downgrades

    • Ben Allen img 2015-07-21 08:48

      Hi Matt,

      Thanks for the comment. As you see in the story, I mentioned that credit ratings agencies have cited growing pension obligations as one of the reasons for downgrades in the past.

      Thanks.

      Ben

      • Matthew J. Brouillette img 2015-07-21 09:18

        Yes, but it is unfortunate that the Governor never mentions this as primary driver of the downgrades. Instead he argues that it means we need to raise taxes on every working Pennsylvanian.

  • Flash img 2015-07-25 08:16

    A year ago republicans had the previous four years to resolve the pension issue, they did not.

    Republicans did not resolve the pension because they did not want full accountability for any affects of that resolution.

    They now feel they can pass their plan, and have a Democratic governor sign off to take the fall for them.

    That will not happen.

    Pension reform will be under the governors' terms.

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