Pennsylvania’s credit rating has improved, though only slightly, with Moody’s Investor Service upgrading the commonwealth’s financial outlook from negative to stable.
Since 2014, Moody’s rating of Pennsylvania’s credit has been a relatively mediocre AA3.
Dan Seymour, Moody’s lead analyst for Pennsylvania, said that’s relatively low for a state.
Pennsylvania is “not functioning very well politically right now, it’s having difficulty passing budgets, it’s having difficulties passing new revenues, and it depleted its rainy day funds a long time ago. So Pennsylvania remains what we call a below-average credit quality state,” he said.
Since last year’s budget impasse, Moody’s has also saddled the Commonwealth with the designation “negative outlook,” which shows financial uncertainty.
But now, Seymour says the outlook’s deemed stable.
“Pennsylvania has not come close to solving all of its problems,” he noted. “But it did make some degree of progress toward reaching political compromise.”
Seymour said there’s “deep institutional strength” in the state’s finances — for instance, it has the flexibility to raise taxes as needed, or to cut spending.