“It’s a simple way to save some money,” Corbett said. “Transferring the balance on a high-interest rate credit card to a no- or low-interest card for a period of time allows you to pay off the debt while saving on interest.
“That’s exactly what Pennsylvania did with its federal unemployment compensation debt,” Corbett said. “Only the transferred balance is nearly $3.2 billion, the high-interest rate credit card is the federal government, the low-interest card is Citibank, and the savings on interest is more than $12 million for Pennsylvania. This money can now be invested in creating jobs and growing businesses.”
“It took just 12 days to get this refinancing in order,” Department of Labor & Industry Secretary Julia Hearthway said. “Without the quick response of Governor Corbett, 12 million additional dollars would have gone to Washington, D.C. as federal taxes. Instead, that money will remain in Pennsylvania to help strengthen our UC trust fund, to grow businesses and most importantly, to create jobs.”
As of July 25, Pennsylvania has cleared its debt to the federal government through interim refinancing with Citibank. The refinancing was engineered by the Pennsylvania Economic Development Financing Authority, or PEDFA, and the Pennsylvania Department of Labor & Industry.
Earlier this summer, Gov. Corbett signed Act 60, Pennsylvania’s UC reform legislation, which allowed for the issuance of bonds to repay the state’s UC debt to the federal government. At that time, the governor’s budget office issued a Request for Financing Qualifications, or RFQ, for the bonds. As part of its response to the RFQ, Citibank offered an incentive that included interim refinancing.
“Gov. Corbett made a commitment to empower the private sector to grow jobs,” DCED Secretary C. Alan Walker said. “As a result of UC reform and this refinancing, Pennsylvania businesses will be left with more to reinvest in growth and new job creation, and that means a stronger state economy.”
The issuance of bonds in late September will become the permanent financing that repays the Citibank interim financing and completes the cycle of transferring the high-interest debt to a low-interest alternative.
