Pa. Is Borrowing to Pay the Bills
— Tom Wolf (@WolfForPA) September 16, 2014
Newsworks reports that the State of Pennylvania is taking out a $1.5 billion loan from the state to pay off its bills — the second time in two years it’s done so.
Jay Pagni, spokesman for Gov. Tom Corbett, said such borrowing solves a cash-flow problem at a time in the year when revenues are typically low and spending is high.
“We see this as a short-term financing,” said Pagni. “We continually examine the budget and the spending to make sure we’re keeping in line with the revenues side of the equation.”
But it’s becoming a political issue. A spokesman for Tom Wolf, Corbett’s opponent in the November election, sent out a press release likening the maneuver to a “payday loan.”
Senate Minority Leader Jay Costa (D-Allegheny) said it shows problems with the past couple of state budgets.
“We don’t have any money left in any of the pots that are controlled by the administration,” Costa said. “It doesn’t bode well for next year.”
The state will pay a low interest rate on the cash, which otherwise would’ve been put into low-yield short-term investments.