Revenue Debates Continue as State Exhausts Short-Term Loan

From PA Chamber of Business & Industry

Another week has gone by without the enactment of legislation that would finalize the 2017-18 state budget. As legislative leaders continue to negotiate behind the scenes on a plan that would warrant bringing the entire General Assembly back into session for a vote this month, the state has officially exhausted the funds on a $750 million loan that the Treasury Department issued earlier this month to keep the General Fund above a zero balance.

“While this short-term borrowing will be repaid by August 23rd, we forecast that without some action, the General Fund balance will again fall below zero by August 29th,” Treasurer Joe Torsella said in a statement. He further noted that the balance will fall to -$1.6 billion around Sept. 15; warned about a potential credit rating downgrade as a result of the ongoing impasse; and strongly indicated that future loans are no guarantee in these types of situations. “Treasury’s Short Term Investment Pool is not a Rainy Day Fund … an overly concentrated loan by the Pool to the General Fund – at a time when the underlying budget is $2.2 billion out of balance, revenues are declining, and we are still without an enacted revenue package – would represent a substantial investment risk,” Torsella added.

This being the case, lawmakers and the administration are certainly feeling more pressure to finalize budget negotiations. The Wolf administration – which has generally been optimistic about the status of the ongoing debate – are now saying that the House needs to come back to session and vote on the series of budget-related bills the Senate sent them late last month. The House hasn’t returned to Harrisburg since that time, due in large part because of what House Majority Leader Dave Reed, R-Indiana, recently told reporters – his caucus has concerns about some of the taxes included in the Senate bills.

The House’s next session day is Sept. 11, though members technically remain “on call” and could be asked to return to Harrisburg before then. The Senate is also on call, but isn’t scheduled to reconvene until Sept. 18.