August 17, 2017

Auditor General DePasquale: Short Term Borrowing Adding Costs That Will Not Benefit State Taxpayers

Auditor General Eugene DePasquale Thursday said the short term borrowing of $750 million to fill deficits in the state’s General Fund are hurting taxpayers.
“All of us should be deeply concerned about the current situation with our state budget. Yesterday, Treasury released a short-term loan of $750 million to the General Fund as a temporary solution to revenue shortfalls and to keep Pennsylvania’s state government functioning.
“Most worrisome is once the $750 million loan is repaid by the mandatory August 23 deadline Treasury forecasts the state’s general fund balance will fall below zero by August 29 and hit negative $1.6 billion by mid-September. This type of borrowing is like getting a bank loan to buy groceries and could prove calamitous for everyone in the Commonwealth.
“Costs are already getting added to the state budget including $141,000 in interest on the temporary loan. That is money that does not help a single Pennsylvania resident.
“Much is at risk: Funding for our schools, daycare for working families, health care for our most vulnerable citizens and protection of our air, water and land.
“Considering these dire conditions, I will monitor this situation and work with Treasurer Joe Torsella on potential options for the fiscal future of the commonwealth. It is important to note that both I and Treasurer Torsella must approve any debt taken on to address this shortfall. All – and I mean all – options will be on the table.
“And all options must be on the table. As Senate Appropriations Chair Sen. Pat Browne (R-Lehigh) said in his budget newsletter recently: ‘In the absence of a timely revenue package, it is possible the Commonwealth will be unable to secure a loan from an outside financial institution for short-term borrowing. If the Commonwealth is unable to secure sufficient funding from the State Treasurer or a financial institution, it will become necessary to temporarily suspend Commonwealth payments until there is sufficient revenue or to permanently suspend some payments if no revenue package is enacted.’”
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