Pennsylvania received its third bond downgrade in two years yesterday after Gov. Tom Corbett signed a budget that papers over a massive deficit with stopgaps and failed to win passage of legislation to rein in the state’s rising public pension debt, The Associated Press reported yesterday. Moody's Investors Service dropped Pennsylvania's $11.1 billion of general obligation bonds down a rung on its ratings ladder, from Aa2 to Aa3, rendering it among the six worst states in Moody's ratings for the 47 states with general obligation debt. It was the second downgrade by Moody's in two years. Fitch Ratings downgraded Pennsylvania last year, and Standard & Poor's has warned that it could downgrade Pennsylvania if it didn't see significant strides to address deficits and pension liabilities. Moody's cited Pennsylvania's growing structural deficit and weak reserves, as well as relatively slow economic growth, that it said makes the state unlikely to keep up with its growing public pension liabilities.
