Pennsylvania on Wednesday borrowed $1.2 billion by selling general-obligation bonds at a "true interest cost" of 2.75%, says Gov. Tom Wolf's office. (Even when the budget is balanced, states like Pennsylvania and New Jersey routinely borrow money to fund long-term projects.) (Revised and updated)
Why do credit ratings matter? Since Pennsylvania's credit rating remains among the worst of any state (only Illinois and New Jersey are lower, according to Moody's), Pa. taxpayers must pay extra to convince investors to buy Pa. bonds.
Before Moody's cancelled its "negative outlook" and S&P reversed its previous warning of a credit downgrade (while warning it could still cut the rating months from now), Pennsylvania debt was pricing at 0.65% above what better-funded, top-rated states like Delaware and Maryland have to pay.
On Wednesday that premium fell to 0.62%, according to Thompson-Reuters Municipal Market Data compiled by Alan Schankel, managing director at Janney Capital Markets in Philadelphia.
"What's most important that we maintain and solidify that rating," Albright added.
Pennsylvania is rated three notches below AAA by both S&P and Moody's. That's still an investment-grade rating, he noted. "Because we got a budget enacted and a revenue plan enacted, it was our responsiblity to update the official statement to reflect all of that reality, so the final offering statement was accurate and up to date. In the end it all worked out."
What's next? Pennsylvania plans to borrow another $2 billion this fall and next year to finance public school construction and renovation, Albright told me.
But isn't Pennsylvania's public school population falling? Albright said this is a one-time program to finance schools the state previously promised to help fund but had delayed actually paying for under Gov. Corbett.
He said the Wolf administration is still reviewing whether and when the state ought to be paying for local school construction in the future.
Among other projects, the Wolf administration is also weighing which Redevelopment Assistance Capital Program (RACP, or, in Harrisburg idiom, "R-Cap") projects it wants to fund around the state. RACP provides matching funds for private hotels and other developments as well as hospital, school, museum, and other projects around the state.
Back to the bond sale: "Gov. Wolf is pleased that the market clearly recognized that the commonwealth has turned the corner and begun to place itself on stronger financial footing," following "years of unbalanced budgets," though "we still have more to do," Wolf's spokesman Sheridan concluded.