‘Disturbing Trend’

Pennsylvania made about 52 percent of its actuarially recommended pension payment in Moody’s latest ranking, eclipsing only New Jersey and Virginia. Thirty-four states made at least 90 percent of the recommended contribution.

“We’re on a very disturbing trend line absent any reform in our pension system,” Charles Zogby, the budget secretary, said during a Dec. 3 briefing in Harrisburg, the state capital.

Corbett was unable to persuade the Republican-led legislature to pass pension changes this year. Wolf also faces Republican majorities.

“It’s going to be a challenge to get anything passed,” said Delahunty at Eaton Vance, which oversees $21.9 billion of munis.

Corbett kept residents’ taxes flat, lowered some business levies and cut funding for education and other programs. He failed to push through a sale of the state’s wholesale and retail alcohol operations, which could have raised revenue.

“They had lots of different options, and they could not come to an agreement on what were the right ones to pursue,” said Fitch’s Kim. “The fact they haven’t explored other revenue items has been a challenge for them as well.”

Pennsylvania’s pension liability as a percentage of revenue, at about 130 percent, is ninth-highest among states and is more than double the median at 60 percent, according to Moody’s.

“Pennsylvania is not alone in dealing with pension costs. Pennsylvania is not alone in dealing with revenue volatility,” said Lyons at Moody’s. “What makes Pennsylvania an outlier is that you have a combination of all of these things at the same time.”

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