The commonwealth is putting off paying over a billion dollars to insurers who administer Medicaid benefits, because its main bank account is almost out of money.
It will be at least a week before the state can afford to pay, and the delay will probably mean the insurers will charge interest.
In some ways, this is a recurring problem for the commonwealth: bills come due at the beginning of the fiscal year, but revenue doesn’t come in until later.
Generally, the state Treasury will authorize a loan to cover the gap. But Treasurer Joe Torsella, a Democrat, refused this year—saying it’s irresponsible to keep lending in the face of a $2 billion budget gap.
It’s been almost three months since the general assembly overwhelmingly passed a spending plan and Governor Tom Wolf allowed it to become law, but lawmakers are still fighting over how to finish balancing the budget.
Torsella’s decision not to authorize a loan has incensed House Republicans, who passed a revenue plan this week that doesn’t raise taxes, instead relying heavily on internal transfers and borrowing against the state Tobacco Settlement Fund.
Governor Tom Wolf quickly expressed his opposition to that proposal, and Torsella told the General Assembly they still hadn’t made enough progress to justify a loan.
House GOP spokesman Steve Miskin said Torsella is politicizing a simple cash flow issue.
“By spending money right now, it’s not going to put us into a deficit. We are not in a deficit,” Miskin said. “This budget is funded, probably—without doing anything—until April or May.”
At the same time, the caucus is criticizing Governor Tom Wolf for deficit spending last year.
Senate GOP Spokeswoman Jenn Kocher said if House leaders want to “move between positions [on borrowing], that’s their decision.” She added, the legislature had plenty of warning about the Treasury’s decision not to give loans.
A spokesman for Wolf said that along with the payments to insurers, a $600 million payment to the state’s biggest pension fund will be pushed back at least a week.
It’s also unclear if there will be enough money for major school expenses next month.
