Treasury offers low-interest loans to groups squeezed by budget impasse

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(The Center Square) - Pennsylvania is about to enter its second quarter of the fiscal year. With no budget in sight, many public programs and agencies across the state are running out of resources to keep themselves afloat.

To assist them, Treasurer Stacy Garrity has opened up $500 million of state funds that programs like Head Start providers can borrow from through short-term loans.

“Our most vulnerable Pennsylvanians, especially our children, should not suffer because of ongoing state budget negotiations in Harrisburg,” said Garrity. “Pennsylvania’s taxpayers expect their hard-earned tax dollars to be put to work, not be put on hold.”

Unlike money that would come through the state’s normal budget process, these loans come with a 4.5% interest rate, which would be due within 15 days of the state budget coming into effect.

“We should not stand by and watch Head Start providers and county-level agencies like those that provide mental and behavioral health support struggle to provide necessary services to families relying on them while they wait for a state budget that is nearly three months late. Treasury is here to do its part to bridge the gap until an agreement is reached,” added Garrity.

The unilateral decision from the Treasury comes amid deep partisan divides between the Democratic-led House and Republican-led Senate. Garrity, a Republican, has set her sights on the executive office and is a frontrunner to oppose Democratic Gov. Josh Shapiro in his upcoming re-election bid.

Garrity’s supporters have hailed the move as taking action while Shapiro and the General Assembly fail to come to an agreement on the budget. Critics say that the loans could serve to extend negotiations even longer while the borrowers accrue interest debt.

Some representatives of county governments have spoken up about the offer with Executive Director Kyle Kopko of County Commissioners Association of Pennsylvania calling it a “welcomed option.” 

“The uncertainty surrounding the state budget is putting immense pressure on Pennsylvania counties, and while this new opportunity may provide some relief, our prime emphasis continues to be urging the Governor and General Assembly to work together to finalize a budget without delay,” said Kopko.

The Senate is expected to reconvene Oct. 3, cutting short their planned absence by more than two weeks and providing some hope that they may be ready to make a budget deal. They’ve accused Democrats of “playing politics” over the issue of long-term mass transit funding, a major obstacle to closing the deal.

Thus far, the upper chamber has met just 36 days since January. The House has met 61 days. Members of both groups are considered full-time legislators. In addition to state benefits, the legislators make more than $100,000 annually and receive yearly cost of living increases.

“We have no greater responsibility than to take care of our most vulnerable Pennsylvanians, and that’s exactly what’s being achieved by making these funds available,” said Garrity.