- Associated Press - Wednesday, January 6, 2016

HARRISBURG, Pa. (AP) - Pennsylvania government is borrowing from the state treasury to tide itself over until spring, officials said Wednesday, as it rushes out billions of dollars held up in an ongoing budget fight between Democratic Gov. Tom Wolf and the Republican-controlled Legislature.

The treasury has extended a $2 billion line of credit to prevent the state government from bouncing checks. The more than 50,000 payment requests made by the Wolf administration total about $6 billion, according to treasury officials.

Some school districts began receiving electronic payments from the state Tuesday and Wednesday. Philadelphia, the state’s biggest city, reported receiving $179 million this week, and the state’s second-most populous county, Allegheny County, reported receiving about $104 million.

The Wolf administration drew $1 billion against the line of credit Wednesday, officials said. The treasury’s loan, made from a short-term investment pool, carries an interest rate of 0.6 percent and payback is required June 30.

The treasury has billions of dollars more in short-term investments should the state need another infusion. A chart released by the treasury projected that the state government’s main bank account would plunge $3 billion into the red in early March, before spring tax collections pick up.

Treasurer Timothy Reese, a Wolf nominee, blamed the state’s shortfall on a long-term budget deficit that also required a $1.5 billion treasury loan in 2014.

“These shortfalls keep getting larger and are happening more frequently,” Reese said in a statement. “Borrowing to meet operating expenses is not a responsible or sustainable solution.”

Pennsylvania’s long-term budget deficit has spurred five credit downgrades in the last four years, and a fight over how to deal with it is a key source of friction between Wolf and Republican lawmakers.

Last week, Wolf released $23.4 billion from a Republican-produced appropriations bill that did not meet his goals for boosting aid to public schools and social services or wiping out the state’s long-term deficit. Wolf used his power of a line-item veto to scratch more than $6 billion from the bill, and is pressing lawmakers to return to Harrisburg to wrap up a budget package that is more than six months late.

The Legislature’s Independent Fiscal Office last month projected that the state’s shortfall will hit $2.4 billion in the 2016-17 fiscal year, which starts next July 1, if nothing is done.

Wolf has sought a tax increase to address it, but has met resistance in the Legislature.

In November, Wolf struck an agreement with House and Senate leaders on the outlines of a $30.8 billion budget package, a 6 percent spending increase. The bipartisan agreement included a tax increase of more than $1 billion a year.

Leaders of the Senate’s Republican majority qualified their support for a tax increase on the passage of their legislation to restructure pension benefits for state government and public school employees.

That bill was defeated last month in the House, where it was opposed by Wolf’s fellow Democrats, as well as most House Republicans, who also turned against the broader budget agreement.

Meanwhile, House Republican leaders have fought with the Wolf administration over legislation they sought to privatize the sale of wine and liquor in Pennsylvania.

Copyright © 2018 The Washington Times, LLC.

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