State House Sound Bites

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

Wolf's budget includes pension borrowing

Written by Mary Wilson, Capitol Bureau Chief | Mar 3, 2015 5:40 PM
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Governor Tom Wolf's $33.7 billion budget proposal includes a plan to borrow money to help pay down some of its pension debt.

The $3 billion bond would be used for the fund that pays out school employees' retirement. Such bonds come with potential cost savings, as well as risk. Because of the gamble, Pennsylvania outlawed such bonds in 2010. Senate Appropriations Chairman Pat Browne (R-Lehigh) said lawmakers aren't about to roll over on that prohibition, which he called more than a "memo to self."

"We need to look at our overall debt -- the components of that debt -- and put together a plan that addresses that," said Browne, "not put additional debt in to solve that problem."

Credit rating agencies, whose scores gauge the state's financial health, don't necessarily see pension obligation bonds as a sign of weakness.

"Bond rating agencies... should like the proposal that you see in front of you," said Randy Albright, the governor's budget secretary.

But there's another catch. Wolf wants to repay the borrowed money using revenue from the state wine and spirit stores. House Republican leaders want to shut down the state's liquor system, not make it more profitable. The House passed a liquor privatization plan just last week.

Published in State House Sound Bites

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