(4/18) Creating budgets that reflect the services residents need at the rate they are willing to pay is always a challenge. It requires both attention to detail and a global sense of where the community stands in relation to taxes and borrowing. In addition to the community’s opinions, governments must be in tune with the opinions of banks and bond rating agencies. Bond
rating agencies, such as Moody’s and Standard and Poor’s, rate governments in general on three things: 1) their ability to accurately project balanced budgets (expenses are equal to or less than revenues), 2) whether they borrow money for capital projects (not for operations or day-to-day expenses), and 3) whether they have a sustainable plan for the future. As a county’s bond rating improves, it
implies a sense of stability, which in turn reduces the risk to banks in lending it money. The end result is lower interest rates on loans. Basically, bond-rating agencies use some very complicated math to prove that a government is worth the risk.
Pennsylvania’s bond rating has dropped six times in recent years, twice since 2014, and is now at its lowest point in 39 years. Pennsylvania is now ranked 48th lowest in the nation, ahead of only New Jersey and Illinois. Standard and Poor’s was clear that the last downgrade was due to frequent budget stalemates, unrealistic income projections, the use of borrowing to pay
for operational expenses, and the use of one-time revenue streams. The end results of this downgrade will be businesses not wanting to locate into Pennsylvania and an increase in interest rates when PA borrows money.
This double whammy will only help Pennsylvania dig its fiscal hole deeper. Senate Majority Leader Jake Corman, R-Centre County, said it best, "This is not a good story for Pennsylvania. It's not a good story when we're trying to recruit businesses and industries to Pennsylvania as a good place to operate."
This past Summer my opponent, the 12-year incumbent in the 91st Legislative District, spent months looking for one-time revenue streams to balance the budget. Although I applaud efforts to streamline government, Dan Moul’s effort only resulted in another extended budget stalemate and identified funds important to our community. Both the ensuing stalemate and the proposed
one-time revenue streams were both highlighted as reasons for the state bond rating downgrade. I have seen estimates that Pennsylvania’s past six downgrades are costing taxpayers between $53,000,000 and $100,000,000 per year in increased interest rates.
Since I took office in 2012, Adams County’s bond rating has improved with every review. In August Moody’s Investor Services upgraded Adams County from Aa3 to Aa2 with a stable outlook. According to the report the upgrade to Aa2 from Aa3 reflects the county’s growing tax base, average wealth, strong financial position with ample reserves and liquidity, manageable pension
liability and slightly elevated debt burden with reduced variable rate exposure. It also is a positive financial reflection for Adams County municipalities and other county institutions.
The report listed our credit strengths as conservative budgeting, and consistent structural balance, that has resulted in a strong financial position with ample reserves and liquidity. A stable tax base is experiencing moderate growth and manageable fixed cost allow for budget flexibility. Moody’s rating outlook for Adams County is stable due to a strong financial position
that Moody’s expects to be maintained over the medium term given management’s conservative budgeting practices. Moody’s reports that any further upgrade would involve material growth of the county tax base, maintenance of the structurally balanced budget and increased reserves and liquidity.
Many people like to believe that government should be run like a business. If so, then it is easy to see which level of government is running its business into the ground and which is establishing a path for continued success. Although partially true, comparing government to business is an oversimplification. It’s more like running a small-town family business. Family
businesses are not about making a quick buck, they are about long-term sustainability for the family, and by extension, the community. This sense of community is why family businesses are lean in their operations and deliberate in their long-term decision making processes. The success of the business is measured by more than just the jobs or money they create; their success is measured by the
confidence and support of their community. This is exactly how government should run. As a candidate for state representative I believe that efficient government can create sustainable prosperity for our communities.
While I have been working with my fellow commissioners to streamline operations, borrowing when rates are low, and working to make accurate budget projections, our 12-year incumbent representative in Harrisburg has failed to help pass a balanced budget on time and is only increasing the chances for another PA bond rating downgrade. I am no expert in economics, but I know
when and how to learn from the experts. When the experts are saying that Adams County is doing something right and the state of Pennsylvania is doing something wrong, we all need to take a more critical look at who we elect. Please take the time to review my six-year record as one of your Adams County Commissioners and compare it to my opponent’s 12 years. It will be clear who is the best steward
of your tax dollars and who is just kicking the can down the road.
If you would like to contact me to discuss bond rating and how it affects our community, the failed budget process at the State, or any issue, I am available at 717-339-6514 or email@example.com.
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