Pa. shuffles cash to ease deficit
A $700 million loan was made to the main account. The action became a political football.
HARRISBURG - Pennsylvania Treasurer Robert McCord said Tuesday he had authorized a $700 million loan to the state government's main bank account after the balance hit at least a 10-year low and dropped below zero.
The transfer, made Monday, borrows from other state funds at a low interest rate of 0.25 percent, and McCord predicted that the state would need to borrow more soon to pay the bills.
The announcement, coming 21/2 months after Gov. Corbett signed a Republican-penned budget package, was immediately swept up into campaign-season politics.
Democrats sought to paint the loan as an indictment of the Republican governor's handling of the state's fiscal affairs. Republicans accused Democrats of trying to twist a routine method of covering a short-term cash shortage into a political weapon against Corbett, who is seeking reelection.
The Corbett campaign and Democratic challenger Tom Wolf's campaign each released a statement accusing the other of reckless fiscal behavior - Corbett as governor, Wolf as revenue secretary under former Gov. Ed Rendell.
At a Capitol news conference, McCord and Auditor General Eugene DePasquale, both Democrats, tied the need for the loan to a persistent structural deficit in the state's government finances, and said it is an alarming sign of the state's deteriorating financial condition.
"There's going to be a day of reckoning very soon," DePasquale said.
Pennsylvania received its third bond downgrade in two years in July, after Corbett signed a $29 billion no-new-taxes budget that was balanced with the help of about $2.5 billion in stopgaps. The budget package authorizes $943 million in additional spending and cuts business taxes.
Republicans noted that the budget is balanced and that such financing has been used under many other governors.
Corbett's budget secretary, Charles Zogby, said politics was behind the hand-wringing by McCord and DePasquale. "To suggest that some historical event is happening here is just hyperbole," Zogby said.
