What's
that you ask? How does Pennsylvania borrow money from itself?
Well
it goes something like this: the state's checkbook (the General Fund) is what
Pennsylvania government uses to pay its recurring bills. This week, the General
Fund ran out of money so the state Treasurer had to create a $1.5 billion line
of credit out of a cash investment fund operated by the Treasurer. Of that line
of credit, $700 million was immediately used. Kind of like using your credit
card to pay your mortgage.
The
administration has stated that this will actually save the state money, which
is laughable. If this were actually true, it should be common practice every
month and why hasn't Governor Corbett done this sooner? Ha!
In
fact, actual loans to be used for the General Fund have only been done four
times. Even if these types of loans were
common, it still begs the question as to whether they should be used for General
Fund purposes at all. In this case, using them is an indication of an
underlying symptom of inadequate and negligent budgeting. There are only a
handful of valid reasons for using the Short Term Investment Program (STIP),
but a failure of leadership is not one of them.
If
the budgeting process was done correctly, with an accurate revenue forecasting
methodology, and a realization that new revenue was needed instead of asking
working families to pay more and school districts to make due with less, this
whole line of credit would be unnecessary. The Corbett Administration claims
they needed to do this to advance funding to Philadelphia schools, but these
schools need this money because they were underfunded by Governor Corbett. It
is like blaming someone else for your bad budgeting.
But you don't have to just take my word for it that these were terrible
budget decisions.
The Independent Fiscal Office and the nation’s three major credit
rating agencies have all noted that choices made in recent Pennsylvania budgets
are creating a structural budget deficit that cannot be solved with the
one-time fixes proposed and passed by the Corbett Administration and Republican
controlled House and Senate.
It seems that Governor Corbett and his Republican friends prefer
budget gimmicks that set up the next governor for a deficit from day one.
It's time for a fresh start.
