DePasquale: State running out of money and time

Jason Addy
York Dispatch

Pennsylvania officials may soon be forced to choose which bills to pay if lawmakers do not pass a revenue budget plan soon, according to the state’s top fiscal watchdog.

A $750 million loan from the Pennsylvania Treasury Department will keep the state afloat for the short term, but the state’s general fund balance will hit zero by the end of the month without lawmakers’ intervention, Auditor General Eugene DePasquale said Thursday, Aug. 17.

Auditor General Eugene DePasquale urges lawmakers to finish the state budget at a press conference Thursday, Aug. 17, outside the York County Administrative Center. DePasquale was joined by West York Mayor Shawn Mauck and state Rep. Carol Hill-Evans. Photo by Jason Addy.

At this rate, the state will be facing a negative general fund balance of $1.6 billion by mid-September, DePasquale warned.

Lawmakers approved a $32 billion budget in July, but factions have been at odds for the first six weeks of the 2017-18 fiscal year over how to pay for the $870 million, 3 percent spending increase over the previous fiscal year.

More:York's senators oppose Senate's plan to close $2.2B budget hole

The state Senate passed a plan to close the $2.2 billion shortfall at the end of July, but House Republican leaders rejected it.

The Senate's plan included a severance tax on natural gas drilling companies and new or higher taxes on consumers' utility bills, as well as borrowing $1.3 billion for the state's share of a 1998 multistate settlement with tobacco companies. 

House Republicans rejected the proposal to borrow against the settlement and are reluctant to plug the budget hole by raising taxes, creating the standoff that is forcing the state to borrow.

On Thursday, Aug. 17, DePasquale launched a passionate call for lawmakers to pass a Marcellus Shale severance tax and legalize marijuana to find significant recurring revenues.

Rising interest: State Treasurer Joe Torsella signed off on a $750 million loan to prop up the state’s general fund for 10 days starting Aug. 14, but the loan must be repaid by Wednesday, Aug. 23, putting serious strain on the state’s bottom line.

The state will be able to repay this loan on time, but DePasquale and Torsella are making it clear they’ll have trouble approving more borrowing if lawmakers cannot agree on a way to fund the spending plan they approved last month.

“At some point, if they don't have a budget passed, we can't continue to sign off on additional borrowing,” DePasquale said.

He and Torsella have said the state’s general fund could have a negative balance for two-thirds of the new fiscal year, starting in mid-September. Filling those funding gaps would require up to $3 billion in borrowing, which is beyond the Treasury’s abilities, according to the financial watchdogs. 

More:Republican effort to fund Pa. budget without taxes stalls

In the first six weeks of the 2017-18 fiscal year, the state has paid $171,000 just to cover the interest on loans to fill budgetary gaps, DePasquale said. 

“It’s the example of going out and getting a loan from a bank to buy your groceries. That’s what’s happening right now,” DePasquale said. “That’s the definition of fiscal irresponsibility.”

Fiscal jeopardy: State Rep. Carol Hill-Evans, D-York City, called on House Speaker Mike Turzai to order lawmakers back to Harrisburg to finish the six-weeks-late budget. 

More:Talks over Pennsylvania budget deadlock take unexpected turn

Without an agreement, the state is facing “deep cuts” to education, public health and public safety programs, she said.

“The commonwealth is standing at the edge of a cliff,” Hill-Evans said. “Speaker Turzai needs to move forward on a commonsense revenue package or we’re going to face deep cuts to the priorities that we care about as Pennsylvanians.”

West York Mayor Shawn Mauck urged Democratic and Republican state legislators to pass a plan that will help everyday citizens, pointing to his borough as an example of real bipartisan leadership and compromise.

If the state runs out of money, “it jeopardizes everything” in West York, including essential infrastructure projects and education funding, Mauck said.

“If the state is on shaky financial ground, so are all the roots of the state,” Mauck said.