Pennsylvania Treasurer Joe Torsella on Friday authorized a $1.8 billion credit line from the Treasury’s short-term investment pool to the commonwealth’s general fund.
According to Torsella, the state legislature’s passage of revenue bills to backfill a $32 billion budget that Gov. Tom Wolf let become law without his signature enabled Treasury to renew its normal cash-flow lending. Wolf is reviewing the bills.
The administration has already drawn an initial $100 million.
Payback date is April 2, 2018 at a variable interest rate equal to the Securities Industry and Financial Markets Association swap index yield.
Twice during the budget stalemate that began July 1, Torsella authorized general fund borrowing from the pool. Earlier this month he authorized of a five-day $700 million line of credit to enable scheduled payments to Medicaid providers. In late August, Treasury extended a $750 million, two-week line of credit to the commonwealth.
The state has repaid both borrowings.
“The appropriate resolution has always been for the General Assembly to adopt a revenue package to fund the enacted budget,” said Torsella. “So I was pleased to see the General Assembly, on a bipartisan basis, complete its work.”
In the coming weeks, said Torsella, Treasury will scrutinize its lending program, and will tweak guidelines for future lending to the general fund. ”I look forward to the governor taking responsible action with the bills now on his desk to finish this budget process.”
S&P Global Ratings rates Pennsylvania's general obligation bonds A-plus, while Fitch Ratings assigns the bonds a AA-minus rating . Moody's Investors Service rates them Aa3.