Pennsylvania Treasurer Joe Torsella on Friday authorized of a five-day $700 million line of credit from Treasury’s short term investment pool to the commonwealth’s general fund, due Oct. 20.
Without this line of credit, said Torsella, the commonwealth would not have been able to make scheduled payments to Medicaid providers.
“As we have said often, Treasury’s investment pool is not a rainy day fund, and few lenders would consider loans to the general fund without an underlying balanced budget plan in place to be either appropriate or prudent,” Torsella said in a statement.
“We have therefore repeatedly called for action to bring the 2017-18 budget into balance.”
By law, Torsella and statre Auditor Eugene DePasquale must sign off on emergency borrowing. They also extended a $750 million, two-week line of credit to the commonwealth in late August.
Torsella warned that without additional liquidity, the general fund is projected to dry up by Oct. 27, and remain in that condition for about five months. During this time, expenditures are projected to exceed revenue by as much as $1.7 billion.
Pennsylvania is in the fourth month of its latest budget impasse. Wolf on July 10 let a $32 billion spending plan for fiscal 2018 become law without his signature. The state Senate approved a $2.2 billion revenue package to balance the budget, but the spending bill has stalled in the House of Representatives has balked.
Wolf is a Democrat. Republicans control both branches of the legislature. The House is in session through Oct. 25 while the Senate expects to reconvene Monday.
Last month S&P Global Ratings downgraded Pennsylvania’s general obligation bonds to A-plus from AA-minus. Moody’s Investors Service rates the bonds Aa3 while Fitch Ratings assigns AA-minus.