HARRISBURG - The Rendell administration will get part of the $1 billion it wanted to borrow to help finance public-improvement and other construction projects across the state.

State Treasurer Rob McCord on Thursday said he would sign off on a $650 million taxpayer-financed bond issue. That amount, he said, will ensure the flow of money until June for projects under contract while avoiding the widening of an already gaping projected state deficit.

At that point, Pennsylvania's new governor, Tom Corbett, can decide whether to float more bonds, and for how much.

"To approve a $1 billion bond issue at this time would be irresponsible," McCord told reporters at a news conference in his Capitol office Thursday. "It's more than we need."

"At the same time," the treasurer said, "to issue zero debt would be terribly unwise" and could lead to projects currently under way being halted in their construction tracks and, later, to costly litigation.

While substantially less than what the Rendell administration sought, the $650 million, McCord said, is enough to "keep the job-producing projects humming" into early summer.

Rendell spokesman Gary Tuma called the $650 million "better than nothing," and said the administration was happy that McCord, a Democrat who was initially against the bond issue, was willing to reexamine his position.

Approval from either the state treasurer or auditor general - Jack Wagner, also a Democrat - was required for the bond issue.

Last week, Wagner, the state's chief financial watchdog, refused to approve it, saying Pennsylvania's debt had increased 39 percent since 2002. Adding $1 billion into the mix would increase the debt an additional 12 percent, which, Wagner said, "is too much to put on the backs of our children and grandchildren."

On Thursday, Wagner released a statement saying that he opposed even the $650 million in borrowing and would not sign off on it.

While it is less than the $1 billion sought by Rendell, Wagner wrote, "it still remains the largest bond issue ever sought by a lame-duck governor with less than seven weeks left in his term."

Wagner noted that the $650 million issue would increase the state's debt payments by about $46 million a year for the next 20 years.

"Americans hold eight million fewer credit cards than they did a year ago because they understand that debt is a bad thing," Wagner wrote. "It's time that state government listened to the public."

Rendell has repeatedly said that by putting off the bond issue, the state would miss out on a federal program that subsidizes the interest costs paid by local governments when they borrow for construction projects. That program, Build America Bonds, expires Dec. 31. It is unclear whether Congress will extend it.

McCord said the compromise would save the state money by forgoing needless interest payments on borrowed money that would sit for months before it is spent.

"It's like saying, 'Why don't you borrow money for your fourth house, you're young, you're going to have more kids, you're going to move, let's just borrow for all three houses that you're going to buy in the next 30 years.' You wouldn't do that," said McCord.

He said the compromise he pushed also ensured "that no one was being slipped a Mickey," and that new projects were not slipped in for funding at the last minute.

"We did not want, whether real or the perception, to leave the Corbett administration or the public with the impression that we were enabling a process where anybody was engaged with a dash for cash," he said.

The Rendell administration has said no new initiatives would be funded by the bond issue, including recently approved public projects that sparked controversy and negative headlines, such as one to build a library named after outgoing U.S. Sen. Arlen Specter.

Last week, administration officials released a long list of organizations and entities that have been approved for the money. In Philadelphia they include Family Court, the Free Library, the Barnes Foundation, the Franklin Institute, the Kimmel Center, the National Constitution Center, the Art Museum, and the Zoo.

Outside Philadelphia, the list included money for the new medium-security facility at Graterford Prison in Montgomery County; the Bensalem police building and a downtown Doylestown parking garage in Bucks County; the Downingtown Library senior center and the Public Safety training facility in Chester County; and the Chester soccer stadium and the Boys & Girls Club of Chester in Delaware County.

Contact staff writer Angela Couloumbis at 717-787-5934 or acouloumbis@phillynews.com.