York County heading to court over loan
- York County opened a $20 million line of credit in November
- As of Wednesday, it has withdrawn about $8.8 million
The York County Board of Commissioners agreed to petition the courts for an extension to pay off a loan it took out during the ongoing state budget impasse.
In October, the county opened a $20 million line of credit, about half of which has been withdrawn, to keep operations going in the final months of the year.
Under the law, whatever is borrowed must be paid back by the end of 2015. But since there's no state budget, the county doesn't have the money to pay up and will ask the York County Court of Common Pleas for an extension until the funds become available.
"If you had to borrow money, it means you don't have it and you can't repay it," Mark Derr, the county administrator, said after the meeting.
Commissioners unanimously approved the measure at their weekly meeting Wednesday.
The loan: The county took out its credit line through Fulton Bank at 1 percent fixed interest plus associated fees last month to cover costs through the end of the year. The unexpected expense will be covered once a budget is passed, but associated fees, about $10,000, and interest will come from county taxpayers.
The true cost of the loan won't be known until after a budget is passed or the end of the year, whichever comes first, since the county will only be charged interest on money it withdraws.
So far, the county has drawn down about $8.8 million to cover payroll and other costs, and to pay vendors for services they provided from July through August, Derr said.
Even if a state budget is passed soon, the county wouldn't receive its portion of state funding for weeks, said county Treasurer Barb Bair.
The county receives about $71 million yearly, or about $6 million monthly, from the state.
The county started dipping into its cash reserve and general funds to cover operating costs since early July, just after the impasse started when Democratic Gov. Tom Wolf vetoed the Republican-crafted budget on June 30.
In court: In its petition, the county will argue the line of credit is an unfunded debt. The county will "show unusual sets of circumstance, financially," said Mike Flannelly, the county solicitor.
A hearing will be held before a York County Court of Common Pleas judge, who will make a ruling. A petition hasn't yet been filed with the courts, Flannelly said.
Doug Hoke, the vice president commissioner, said he's hopeful a judge rules in the county's favor.
"It's just the rules of the law and we have to follow the law," he said.
Commissioner Chris Reilly noted petitioning the court for a loan payment extension is unchartered territory for the county.
"We've never requested one before," he said.
— Reach Greg Gross at email@example.com.