NEW YORK (Reuters) - S&P Global Ratings placed Pennsylvania’s credit ratings on a watch list on Thursday for a possible downgrade due to budget concerns.
The struggling Northeastern state, whose general obligation bonds are rated AA-minus by S&P, has yet to enact a complete spending and revenue plan for the fiscal year that began on Saturday.
“The CreditWatch action reflects Pennsylvania’s eroding financial position and our view that there is a significant likelihood that the commonwealth will not enact a structurally balanced budget for fiscal 2018,” S&P credit analyst Carol Spain said in a statement.
Pennsylvania lawmakers passed a $32 billion state spending plan hours before the new fiscal year began but did not devise a revenue package to pay for it all and close a $2.3 billion deficit. It is now among a small handful of states that have not enacted a fiscal 2018 budget.
S&P also placed Pennsylvania’s A-plus appropriation rating, single-A departmental appropriation rating and A-minus moral obligation rating on watch with negative implications.
The company said it would consider removing Pennsylvania’s ratings from CreditWatch if state lawmakers negotiate a balanced budget within 90 days.
If Pennsylvania enacts a budget that relies on “optimistic assumptions” or one-time revenue sources, S&P said it would probably lower the rating.
Reporting by Laila Kearney; Editing by Lisa Von Ahn