March 6, 2015

Governor’s Budget Office Increases Credit Line From Treasury By $500 Million

Due to ongoing issues with Pennsylvania’s structural finances and past budgetary practices, the Office of the Budget Friday announced it found it necessary to take a Short Term Investment Program (STIP) loan in order to be prepared to meet payroll obligations in the near-term.
Office of the Budget and the Pennsylvania Treasury renegotiated their current STIP agreement by adding $500 million to the total amount that the Commonwealth may access as needed to provide cash flow in the General Fund. With the added $500 million, the maximum amount of the current STIP is $2 billion.
OB and Treasury do not expect that the Commonwealth will need to access the additional $500 million. OB and Treasury estimate that on Friday, March 13, 2015, cash flow in the General Fund will reach approximately $100 million. The added $500 million will provide a reserve to ensure that there is sufficient cash flow to meet all obligations payable from the General Fund during this period.
Former State Treasurer Rob McCord and Auditor General Eugene DePasquale, both Democrats, were critical of Gov. Corbett for first asking for this line of credit to help the state’s cash flow even though it has become an accepted practice.