Pennsylvania extends itself $750M credit line during budget impasse

Aug. 5 (UPI) -- Pennsylvania's treasurer approved a short-term $750 million loan this week to the state to cover payroll for public sector workers as lawmakers struggle to close a large budget gap.

The state ended the 2016 fiscal year $1.5 billion in the hole and there is a predicted budget gap of $700 million as part of a $32 billion spending plan passed last month, though they have yet to agree on all the revenue needed to fund it. The credit agency Standard & Poor's said the state is undergoing a "multiyear financial erosion" and warned the commonwealth's credit rating could be downgraded if lawmakers do not act to resolve the revenue problem.

Pennsylvania's Republican-controlled Senate passed a bill in July that would raise taxes, primarily on oil and natural gas drilling, which Democratic Gov. Tom Wolf supports, but the Republican House has thus far refused to sign on, saying the natural gas tax would be passed to consumers who will wind up footing the bill.

The legislation would only raise about $600 million, according to estimates, meaning it would not address the whole of this year's gap or the $1.5 billion from last year, which was caused by weaker-than-expected sales tax receipts.

The $750 million line of credit from the treasurer is expected to cover expenses for a 10-day period this month, giving lawmakers a short amount of time to reach a deal or risk dipping further into the red only a month into the new fiscal year, which began July 1.

Pennsylvania incurred a nine-month delay in passing its budget last year, which caused disruptions in social programs for poor seniors and the state's college system.

Wolf called on the legislature to act quickly to avoid another such problem in 2017.

"There is a bipartisan agreement on the budget; now is the time to finish the job and pay for the programs that the legislature passed," he said.