Last Place
Pennsylvania ranked last among U.S. states in job growth from January 2011, when Corbett took office, to October 2014, according to the Bloomberg Economic Evaluation of States index.
“The overall recovery nationwide has been slow, but this is even slower,” said John Sugden, an analyst at Standard & Poor’s in New York.
Investors have a chance to weigh in on Pennsylvania’s credit this month. The state plans to sell general-obligation debt by year-end, said Jay Pagni, a spokesman for Corbett.
Ten-year Pennsylvania bonds yield about 2.48 percent, or about 0.34 percentage point above benchmark munis, Bloomberg data show. In comparison, obligations of California, the most- indebted state, with an S&P rating one step lower than Pennsylvania’s, yield 2.39 percent.
Downgrade History
S&P and Fitch Ratings rank Pennsylvania AA- and Moody’s gives it an Aa3, all the fourth-highest levels. That’s two steps lower than the Moody’s average state rating of Aa1, said Kimberly Lyons, a Moody’s analyst in New York.
Credit analysts pointed to the $2 billion of one-time fixes that legislators used to balance this year’s $29 billion budget. Fewer than 10 states used “one shots” to balance fiscal 2015 budgets, according to Moody’s.
“Six years away from the end of the recession, continuing to have a structurally unbalanced budget, it’s a red flag,” said Eric Kim, a director at Fitch in New York.
The rising tab for public workers complicates the quest for a fiscal fix. Pennsylvania administers two pension plans covering about 700,000 people. The state’s contributions will reach $3.1 billion in fiscal 2019, compared with $424.5 million in 2009, according to a budget presentation.