Pennsylvania Governor-elect Tom Wolf earned a historic victory in ousting the state’s incumbent chief executive last month. Now budget woes and mounting retirement expenses threaten to undermine his campaign pledges.

The 66-year-old Democrat will assume control of a government that has trailed all U.S. states in job growth since 2011. He has to balance promises, including more money for schools, with a $2 billion revenue shortfall for the year that begins July 1. Only New Jersey and Virginia are struggling more than Pennsylvania to fully fund retirement costs, according to Moody’s Investors Service.

Pennsylvania’s credit has been cut this year by each of the three biggest rating companies, to two steps below the average for U.S. states. The grade may fall further if Wolf can’t plug revenue misses, said Bill Delahunty, the head of municipal research in Boston at Eaton Vance Management. Borrowing costs for the sixth-most-populous state may rise should the new governor fail to address the pension burden, said Paul Brennan, a money manager at Nuveen Asset Management, which oversees about $110 billion in munis.

“The liability is growing -- you can’t get away from that math,” Brennan said from Chicago. “Steps towards a solution are what the market wants to see.”

Neighborly Comparison

Neighboring New Jersey provides “a good glimpse of what the future could look” like in Pennsylvania, Brennan said.

In a New Jersey general-obligation sale Dec. 3, relative borrowing costs on 10-year debt were five times greater than in the previous offer in May 2013, data compiled by Bloomberg show.

Wolf, who takes office Jan. 20, plans to work with Republican majority leaders in the legislature on pensions and on introducing a 5 percent tax on natural-gas production, said Jeffrey Sheridan, a spokesman. He remains committed to boosting school funding.

“There needs to be a big emphasis on doing things to grow the economy, like investing in education so that the foundation is laid for long-term growth,” Sheridan said by telephone.

This is the first elected post for Wolf, who was chairman of a family-owned business that supplies kitchen cabinets. He was Pennsylvania’s Revenue Secretary, an appointed position, under Democratic Governor Ed Rendell from 2007 to 2008. With Wolf’s win last month, Tom Corbett became the first governor in Pennsylvania to lose re-election since 1968.