Wolf to lease out Pennsylvania Farm Show venue
Gov. Tom Wolf intends to lease to lease the Pennsylvania Farm Show Complex and Expo Center in Harrisburg for $200 million upfront.
Such a move, which he outlined in his budget proposal in February, would raise revenue for the cash-strapped state, Wolf told reporters Monday.
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 House of Representatives has balked.
“This further action will mean we can make our complete payments to local school districts and providers of human services, treatment programs, child care and other important services that Pennsylvanians rely on," Wolf said. Last week, he called for $1.2 billion of borrowing against state Liquor Control Board profits.
His administration expects to issue a request for proposals this week and the deal could close by year's end. Under the agreement, the commonwealth will lease the property for 29 years to a private operator while retaining ownership and control. The review process for proposals will involve multiple agencies, he said, including the Department of Agriculture.
The complex, three miles north of downtown Harrisburg, hosts the annual namesake agricultural show, plus automobile shows, sporting events and conventions. President Trump held a rally there in April to celebrate his first 100 days in office and spoke there while campaigning.
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.
The governor favors a tax on Marcellus Shale natural gas drilling, though the legislature to date has opposed it. Wolf has opposed a House plan in play, saying it recklessly siphoned funds from dedicated accounts.
Since the fiscal year began, Pennsylvania has drawn on a $750 million short-term loan from the state Treasury’s short-term investment pool, which it has repaid, and transferred $700 million from its motor license fund.
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.
A resolution of the budget that does not move the state towards fiscal balance may lead to more credit rating action, according to Loop Capital Markets.
"Spreads for state GOs, which had been fallen over the first six months of the year, have increased by 5 to 10 basis points in recent weeks," said Loop. Late September spreads show Pennsylvania nearly 60 basis points above the implied Municipal Market Data rate.
The standoff could also affect ancillary credits, Loop added. The nine-month fiscal 2016 stalemate forced school districts to rely on reserves and short-term borrowing.