The Moody's downgrade: Inaction's price
“What's the rush?” That's what state Rep. Gene DiGirolamo famously asked this month before making the motion to remand to committee long-overdue public employee pension reform legislation. Consider the Bucks County Republican's question now infamous, given it was one reason cited by a credit rating agency in downgrading the Keystone State's debt.
On Monday, Moody's Investors Service cut the rating on more than $11 billion in general obligation bonds. In addition to the multibillion-dollar pension debt that only will balloon with inaction, Moody's cited Pennsylvania's just-passed smoke-and-mirrors budget, one that heavily relies on one-time revenue and fuels the commonwealth's “growing structural imbalance.” The move will lead to higher borrowing costs, meaning a deeper dive into taxpayers' pockets.
The Legislature's Republican majority responded as expected, bobbing and weaving to note that Moody's praised it for another on-time budget. The Democrat minority responded predictably, shilling for more “revenue,” the latest attempt to tax Pennsylvania to prosperity.
Gov. Tom Corbett, meanwhile, continues touring the state to push stalled pension legislation. And while he admits it would do nothing to immediately reduce the state's $50 billion unfunded liability, it does begin what will be the long process of unwinding an unsustainable pension system.
Indeed, great journeys begin with first steps. Let's get on with this one.