State House Sound Bites

Capitol reporter Mary Wilson covers Pennsylvania politics and issues at the Pennsylvania state capitol.

For first time under Wolf, state borrows to cover expenses

Written by Mary Wilson, Capitol Bureau Chief | Mar 6, 2015 5:24 PM

Photo by Associated Press

Eyeing a perilously low fund balance, Governor Tom Wolf's administration is taking out a $500 million line of credit with the state Treasury.

The short-term loan will allow the commonwealth to meet basic operating expenses, despite insufficient cash flow. It builds on a $1.5 billion internal loan agreement made under the Corbett administration late last year.

According to a press release sent Friday afternoon, borrowing may not be necessary to pay bills. The Wolf administration expects $100 million to be sitting in state coffers by next Friday, which would be in the nick of time.

Wolf criticized this kind of internal borrowing as a candidate and a governor-elect, calling it evidence of "Pennsylvania's financial crisis." Governor Tom Corbett's administration took out a line of credit for $1.5 billion last September, and hit the borrowing limit about two months later. The state Treasury's spokesman at the time said it was the earliest point in the fiscal year the state had borrowed money to deal with cash flow problems.

In a written statement, the Wolf administration vowed to make these short-term loans "a thing of the past."

Wolf spokesman Jeffrey Sheridan called the latest $500 million line of credit a reflection on the Corbett administration.

"It's an extension of what they have done," said Sheridan, speaking about negotiating the additional loan. "We were forced to because of what they left behind for us."

Published in State House Sound Bites

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Comments: 2

  • Larry img 2015-03-08 09:48

    This is what republican fiscal conservatism has left us, a larger debt and three credit downgrades.

    Republicans should now feel obligated to work with this governor to get Pennsylvania's finances right with the current strategy of shifting the tax burden from middle class families to resolve the debt issue.

    But to truly build future business investment in Pennsylvania will take changing the tax structure from a regressive one to a progressive one.

  • Valen Smith img 2015-07-07 03:51

    Most of the state's holdings are in stocks or real estate and taxes are payed at unpredictable times. The state therefore borrows money as a matter of convenience in order to be able to pay the bills on time. This is quite similar to how a person with a good job and a savings account might still use a credit card from time to time or find UK payday loans reviews here. Tax the rich, tax the corporations, problem solved. The notion that taxing these entities is bad for job creation is bullocks.

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