Pennsylvania lawsuit challenges governor's move to borrow against liquor

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PHILADELPHIA -- Gov. Tom Wolf's proposal to borrow $1.25 billion against future profits from the state-run liquor store system faces a legal test in the Commonwealth Court of Pennsylvania.

Matthew Brouillette, president and chief executive of the Commonwealth Partners Chamber of Entrepreneurs, filed a petition for a preliminary injunction Monday, calling Wolf's move unconstitutional. The other plaintiffs are Harrisburg-area businessman Ben Lewis and state Rep. Jim Christiana, R-Beaver.

Wolf said Oct. 4 that he would ask the Pennsylvania Liquor Control Board to authorize the borrowing. The board last week referred the matter to its legal staff.

The governor's office had no comment on the lawsuit.

Democrat Wolf in July let the $32 billion budget become law without his signature, but lawmakers in Harrisburg remain divided over how to fund the budget. Republicans control both branches of the legislature. The commonwealth faces a deficit of $2.2 billion.

The state Senate this week is considering tweaks to a House-approved revenue bill that includes tobacco borrowing, fund transfers and a variety of niche taxes.

S&P Global Ratings last month downgraded Pennsylvania’s general obligation bonds to A-plus from AA-minus. Moody’s Investors Service and Fitch Ratings assign Aa3 and AA-minus ratings, respectively.

State Treasurer Joe Torsella on Oct. 13 authorized a five-day, $700 million line of credit from Treasury’s short term investment pool to the commonwealth’s general fund to enable the commonwealth to make scheduled payments to Medicaid providers.

Treasury also extended a $750 million, two-week line of credit to the commonwealth in late August.

On hold is a combined $600 million in payments to state-related universities Penn State, Pitt, Temple and Lincoln, which could force them to terminate their discounts to Pennsylvania students. Lincoln relies on the commonwealth to fund 25% of its operating budget.

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Budgets Ratings Lawsuits Tom Wolf Commonwealth of Pennsylvania Pennsylvania