State budget impasse: York County looks to borrow $20M
York County is poised to borrow tens of millions of dollars to fund operations through the end of the year as the state budget impasse nears the 100-day mark.
The county has been dipping into its cash reserve and general funds to cover costs since early July, just after the impasse started when Democratic Gov. Tom Wolf vetoed the Republican-drafted budget on June 30.
But those funds are running low and the county will begin to have cash flow issues in about a month, said Mark Derr, the county administrator.
With no end to the impasse in sight, the county will now seek to borrow $20 million from creditors, Derr said during the weekly commissioners meeting Wednesday.
"The county doesn't want to take this step," he said.
But the county relies on about $71 million, or $6 million monthly, in Harrisburg-issued funding for state-mandated services, such as human services, Derr said.
Borrowing: Under the plan, the county would first seek a line of credit and, when secured, draw from it as needed through the end of December, Derr said.
The county, along with other organizations, such as non-profits, will receive funding retroactive to June 30 after a budget is passed.
Though the county's plan would be a short-term fix, it will likely have lasting implications.
Taxpayers will bare the cost of interest charged on the loan and opening such a large line of credit could also hurt the county's credit excellent rating, Derr said. Just how much they'll have to pay will depend on the loan.
The county has a stable long-term bond rating of AA, a designation its held since 2010. The rating is the second-highest in the range within Standard & Poor's scale.
"I'd hate to have any type of blemish on our credit rating due to the state budget impasse," Derr said in an interview after the meeting.
Paying it back: The loan would, under state law, have to be paid back by the end of the year unless the county can prove in the courts that it is an unfunded debt, which it would be if a budget isn't passed by then.
The county is taking the proactive step of working to secure the $20 million credit line because it would take 4 to 6 weeks for state funding to trickle down Interstate 83 to York once a budget is signed into law.
Opening a credit line would avert employee furloughs for now, at least, Derr said. It would also allow the county to continue offering services at the same level it does now.
"It's very important to continue these services," said county treasurer Barbara Bair during the meeting. "They're very important services."
Robb Green, the county controller, noted the impasse isn't affecting the county pension and retirees will be paid no matter what.
Commissioners: Commissioner Chris Reilly said borrowing money is the least painful plan.
"If this thing (the impasse) drags on indefinitely, we'd have to revisit it," he said.
Doug Hoke, the vice president commissioner, said it's never good when an organization or government entity has to rely on creditors in order to maintain an expected level of services.
"I think we're hoping for the best but preparing for the worst," Hoke said. "We have no control over it. It's just difficult to not know from day to day if we're going to get the money that's been allocated."
President commissioner Steve Chronister, who touted a mediation plan to get state Democrats and Republicans to the table to hash out a budget, said he remains hopeful the county won't have to turn to creditors.
But on Wednesday as he watched news coverage of the state House debate on Wolf's latest tax plan, he said he's losing hope for a budget to be passed anytime soon.
"I don't see a light at the end of the tunnel," Chronister said. "We're being held hostage with (taxpayer) money that's rightfully ours."
— Reach Greg Gross at email@example.com.