News that doesn't receive the necessary attention.

Wednesday, September 14, 2016

State of Pennsylvania out of money, for 4th time in 2 years must borrow from $2.5 billion line of credit to meet short term cash needs. $2.5 billion must be repaid in 9 months. State Treas. cites state's poor financial health-Penn Live

9/13/16, "Pennsylvania to borrow again to avoid running out of money to pay bills," pennlive.com, Jan Murphy 

"Gov. Tom Wolf's administration is drawing another $1.2 billion against the $2.5 billion line of credit that Treasury extended to the commonwealth to avoid running out of money to pay bills. 

State Treasurer Timothy Reese announced this transaction on Tuesday which comes on the heels of last month's $400 million draw against the line of credit when the state was experiencing similar cash-flow problems. 

"Continuing to borrow to pay our state's bills clearly illustrates Pennsylvania's poor financial health," Reese said.

"The line of credit merely addresses the symptoms and does nothing to cure the cause – our state's structural deficit." 

This is the third time in 2016 and the fourth time in 24 months that the state has needed to borrow money to meet short-term cash needs. 

Having these continued shortfalls and having them happen earlier in the fiscal year is a growing concern because it can impact the state's credit rating and cause taxpayers to have to pay interest on the money that is borrowed, according to Treasury officials. 

The $2.5 billion line of credit has an interest rate of 0.75 percent on the money borrowed against it. The state is required to pay back the loan to Treasury by June 30, 2017."
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Comment: $2.5 billion must be repaid in 9 months by Pennsylvania taxpayers. (June 2017). 








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