HARRISBURG, PA — The Shapiro Administration released the Commonwealth’s first-ever debt management policy this week, marking a significant step towards responsible fiscal management of taxpayer dollars. The new policy not only provides written guidance for issuing debt but also establishes clear policy goals within the legal frameworks for new funding and refunding.
Secretary of the Budget Uri Monson, who unveiled the policy, underscored its importance in ensuring Pennsylvania’s long-term financial success. This policy is part of the Administration’s commitment to fiscal responsibility, which has already saved the Commonwealth millions of dollars in its first year.
“Governor Shapiro’s sound fiscal management during our first year in office is saving the Commonwealth and our taxpayers millions of dollars – and this new debt management policy will help us ensure that we are continuing to set the Commonwealth up for long-term financial success,” said Secretary Monson.
The importance of a comprehensive debt management policy cannot be overstated. It provides the Commonwealth and the public with predictable, consistent policies for managing the state’s debt portfolio. This includes guidelines for determining the amount and type of debt to be issued and the management of the debt portfolio.
Moreover, this new policy sets specific guardrails to ensure fiscal stability and responsibility when making decisions to issue debt. Even though Pennsylvania has low outstanding levels of debt and is significantly below its legal borrowing limit, these guardrails further restrain the use of this capacity to avoid over-borrowing.
The Government Finance Officers Association recommends that governments adopt comprehensive written debt management policies that reflect local, state, and federal laws and regulations. This move by the Commonwealth aligns with these recommendations, marking a significant milestone in Pennsylvania’s fiscal management.
In December, Secretary Monson announced a successful bond sale of approximately $1.3 billion in new General Obligation (GO) Bonds, saving taxpayers nearly $100 million on debt service savings over the life of the bonds.
Furthermore, during the Shapiro Administration’s first year in office, all three major credit rating agencies affirmed the Commonwealth’s responsible budgetary management: Fitch Ratings upgraded Pennsylvania’s credit rating to ‘AA’ from ‘AA-‘; Moody’s reaffirmed Pennsylvania’s Aa3 issuer credit rating and upgraded the Commonwealth’s rating outlook to positive from stable; S&P Global Ratings improved Pennsylvania’s outlook to ‘positive’ from stable.
This new debt management policy is a significant step towards ensuring Pennsylvania’s fiscal stability and prosperity, safeguarding the interests of taxpayers, and setting the Commonwealth up for long-term success.
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