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 The leading web portal for pharmacy resources, news, education and careers March 17, 2018
Pharmacy Choice - Pharmaceutical News - Pa. treasurer authorizes another loan to keep state's general fund afloat [The Patriot-News, Harrisburg, Pa.] - March 17, 2018

Pharmacy News Article

 10/13/17 - Pa. treasurer authorizes another loan to keep state's general fund afloat [The Patriot-News, Harrisburg, Pa.]

Oct. 13State Treasurer Joe Torsella on Thursday announced he had issued a $700 million loan from Treasury's short-term investment pool to help cover $1.2 billion in scheduled payments to Medicaid providers despite ruling out a similar borrowing last month.

The loan is to be paid back on or before Oct. 20.

Torsella stated previously that he would not issue any more loans until the 2017-18 general fund budget was brought into balance. However, he said some executive actions taken by Gov. Tom Wolf addresses those concerns.

After the latest legislative efforts to arrive at a revenue plan to fully fund the $32 billion enacted budget collapsed in the House last week, Wolf announced he would "manage" the situation with the revenues that are available along with a few other moves.

He plans to securitize future cash transfers from the Pennsylvania Liquor Control Board and lease the Pennsylvania Farm Show Complex & Expo Center to a private operator. Both of those moves have raised questions as to whether he holds the executive authority to do them without legislative approval.

Additionally, the four state-related universities Penn State, Pitt, Temple and Lincoln along with University of Pennsylvania vet school have not been funded, saving nearly $600 million.

Torsella said this budget-balancing plan "should be no one's first choice for long-term fiscal policy, neither should be continued financial uncertainty nearly three months into the fiscal year. Under these circumstances, and having been presented with preliminary detail from the Governor's Budget Office concerning the plan to bring the budget into balance, Treasury believes extending this five business day line of credit to be prudent."

Auditor General Eugene DePasquale, who agreed to sign off on the short-term loan, added, "To be clear, this is not an ideal situation. We are now three and one-half months past the deadline to have a balanced budget. As we review the governor's proposal, anything the treasurer can do to continue to allow the government to function, and possibly prevent a credit downgrade, is important."

The treasurer's decision drew immediate rebuke from House Republicans.

They chastised Torsella for not issuing a short-term loan last month, which they said contributed to S&P Global's decision to downgrade the state's credit rating from AA- to A+.

"The sheer and utter hypocrisy. What exactly has changed? The idea that the governor can just unilaterally fund the budget on his own based on hope?" said House Republican spokesman Steve Miskin.

"This particular treasurer and this governor ... allowed a credit downgrade and missed payments for the first time in commonwealth history just to create a crisis. Now all of a sudden they are using public money that has always existed to make a loan. It goes back to the question of what has changed?"

Torsella cautioned that this isn't the last of the cash-flow problems the state will encounter.

As soon as Oct. 27, the general fund will run out of money again and remain that way for approximately five months. During that time, he said expenditures are expected to exceed revenue by as much as $1.7 billion.

Given that, he said he continues to have serious concerns about the state's long-term fiscal health when it has to rely on short-term borrowing to fund routine governmental operations.

"We should not paper over problems or borrow to fill recurring deficits. As credit rating agencies have warned, failure to address the Commonwealth's structural deficit and pass balanced budgets on time put Pennsylvania at risk for additional downgrades," Torsella said.

With the House and Senate to return to session on Monday, he urged them to get to work on adopting a "responsible revenue package to fund the enacted budget, including important and expected investments in higher education" as soon as possible

He said will continue to monitor legislative, executive and financial developments in the weeks ahead to determine his future actions.


(c)2017 The Patriot-News (Harrisburg, Pa.)

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Distributed by Tribune Content Agency, LLC.

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