Gov. Corbett, still pushing for the state General Assembly to return from recess to take up legislation to change the state pension plans, today issued a new release about Moody’s Investors Service downgrading of Pennsylvania’s bond rating.
Corbett’s news release said: Today, Moody's Investors Service cited the commonwealth’s current pension crisis as a key reason for downgrading Pennsylvania’s general obligation rating to Aa3 from Aa2. While the commonwealth benefits from a strong economy and low unemployment, Moody’s stated that unfunded pension liabilities, projected to grow to $65 billion from the current $41 billion, will continue to be a major cost driver on the commonwealth.
What it didn’t say: Actually Moody’s was much more pessimistic about the state’s “strong economy,” citing the new budget signed into law by Corbett and “modest economic growth” in Pennsylvania as some of the reasons for the downgrade.
Moody’s said: The downgrade of the general obligation rating to Aa3 reflects the commonwealth's growing structural imbalance, exacerbated by the fiscal 2015 enacted budget that depends on non-recurring resources; a weak GAAP [generally accepted accounting principles] balance position that will further deteriorate based on the budget's one-time measures; and the expectation that large and growing pension liabilities coupled with modest economic growth will limit Pennsylvania's ability to regain structural balance in the near term.
Earlier in the day Corbett’s reelection campaign emailed to reporters a column penned in today’s Times of Chester County by GOP leaders in Philadelphia and Bucks, Chester, and Montgomery counties. That column disputed the “so-called ‘rift’ in the Republican Party” about legislation to change the state's pension plans.
What the column said: What is unusual is the failure of our Democratic friends to recognize the cost of doing nothing to address pension reform. Given the clearly defined consequences of inaction, we would hope that some Democrats would join with Republicans in implementing necessary reforms. Unfortunately, that has not been the case, and these Democrats have largely escaped criticism for their failure to be part of a lasting solution.
What the column didn’t say: Corbett has been unable to get his own political party, the Republicans who control the state House and Senate, to put up enough votes for the pension legislation. The Republicans, if united, could pass the legislation without a single Democratic vote. Instead, they went on summer recess, prompting Corbett to line-item veto on July 10 nearly 20 percent of the General Assembly’s budget for the fiscal year that started on July 1. The Republicans in the Senate and House, unhappy with that move, blamed Corbett for the lack of progress on the pensions issue.