Wolf: Treasury Will Loan Money; Treasury Says Not So Fast
Governor Tom Wolf announced Tuesday that the Treasury is loaning money to cover the commonwealth’s short-term expenses—including upcoming payments to public schools.
That was news to Treasurer Joe Torsella, who said the loan still isn’t authorized and won’t be until Wolf provides more details on how he plans to balance the state budget.
The loan in question has been a point of political tension.
Over the last several years, it became common for the Treasury to loan money from its Short-Term Investment Pool when state revenues didn’t meet expenditures. But this year, Torsella said that’s an irresponsible move while the state budget is $2.2 billion out of balance.
The imbalance remains.
But Wolf said a loan is now justified because he’s personally making sure the budget will be funded.
That includes borrowing against the state Liquor Control Board, leasing out the Farm Show complex, not filling around 1,600 empty state jobs, selling buildings, consolidating agencies, and potentially not allocating $600 million in funding for several state-related colleges and universities.
It’s unclear how much money that would make altogether.
The LCB borrowing is projected to bring in $1.25 billion up front, and the administration said it can get $200 million in the Farm Show lease. But Republicans have said they’re working on legal challenges to oppose those moves.
The other numbers are hazier, and no official version of the plan has been released. But Wolf said he thinks it will satisfy rating agencies.
“If you look at what Standard and Poor’s said in their downgrade, it was the uncertainty—the fact that nobody was stepping forward to actually take responsibility for the financial well-being of this commonwealth,” he said.
A spokesman for Torsella said the governor’s announcement was premature, and the Treasury’s position on the loan “remains unchanged” until they see a definite, balanced funding plan.
House Republican spokesman Steve Miskin said it’s disingenuous for Wolf to say a loan is more appropriate now than when lawmakers were negotiating a plan, since nothing concrete has changed.
“You know, if the barometer is hope, why didn’t the governor do this two months ago?” he asked.
In a statement following Wolf’s original comments, administration spokesman JJ Abbott said the governor had been “expressing his confidence his plan to manage the deficit will bring the budget into balance.”
Abbott said nothing has changed regarding expectations for short-term cash flow, and that “pending payments to school districts, Medicaid providers and others who rely on state payments will be made on time.”
He added, the administration is in “constant contact” with the Treasury.