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.