Fitch Ratings last week affirmed its AA rating and stable outlook on Pennsylvania’s approximately $8.7 billion of general obligation debt.
While the commonwealth now has an approved $27.8 billion fiscal 2010 budget, that spending plan relies upon a table games bill. Gov. Edward Rendell has said the new gambling initiative needs to generate $200 million or more in new revenue. The additional revenue will help support certain programs designated as non-essential services at higher educational institutions and other organizations.
The state was operating without an approved fiscal budget for more than three months.
Current plans call for businesses to pay a potential $15 million one-time licensing fee to implement table games, such as blackjack and roulette, at racetracks and larger slot casinos. Legislators continue to debate the tax rate on table game revenue, with House Democrats looking to tax at a higher percentage.
Moody’s Investors Service assigns a Aa2 to the credit. Moody’s changed Pennsylvania’s outlook to negative from stable in late August due to the budget impasse and a planned short-term borrowing in fiscal 2010. The state has not issued notes for cash-flow needs since fiscal 1998.
Standard & Poor’s rates the commonwealth AA with a stable outlook.