As he continues to manage the state’s fiscal situation in the absence of a budget-balancing revenue package from the General Assembly, Gov. Tom Wolf expressed confidence that State Treasurer Joe Torsella will resume authorizing short-term lending allowing to ensure October payments to human services providers and public schools will not be missed.
“I do have every confidence that the Treasurer will see great virtue in what I’m doing to manage the finances of this state,” he said.“Keep in mind, the borrowing is something the state does all the time at this time of the year. The heavy cash-flow months for the commonwealth are January, March, April and, last year, May…but it’s the second half of the fiscal year, so typically there is some short-term borrowing that happens at this place in time where you are borrowing against revenues you expect later in the year.”
Wolf explained that the commonwealth is currently facing a pressure-point period, with state payments due to those who rely on funding – at the same time, the state’s General Fund is facing a three- to four-day period where its balance will be at or near zero that would necessitate short-term borrowing.
“The next (pressure-point period) is right around now,” he said. “We have, actually, a big reimbursement coming from the federal government for money we have spent, but I think there is a three- or four-day gap sometime right around now. When I say short-term borrowing, that’s the kind of borrowing I’m talking about.”
The Treasurer’s Office on Wednesday, however, was slightly surprised to hear of the governor’s confidence, stating the Treasurer’s position on authorizing additional short-term borrowing has not changed in the absence of more information from the administration.
“We are looking at all the details with what the governor is proposing,” said Treasury spokesperson Michael Connolly. “We need to see what is and is not in the plan and how the numbers add up.”
Some legislative Republicans were happy to see the Treasurer hold the line – even if just for now – on short-term borrowing.
“We are pleased to see the Treasurer has not changed his position,” said Senate Republican caucus spokesperson Jenn Kocher. “We believe you cannot paper over or borrow out of the state’s fiscal problems. Any borrowing will have to be combined with dependability and sustainability in budgeting.”
Should that borrowing not come to fruition, Wolf said he has no backup plan, but noted that the long-term goal of his future financial management is to put Pennsylvania on a sound fiscal footing into the future.
Pennsylvania’s General Fund started Wednesday with a positive balance of just over $899 million, according to the state Treasury’s Transparency Portal.
Another move by the governor to manage the state’s finances that he hopes will close out the deficit left over from FY 2016-2017, the securitization of future cash transfers from the Pennsylvania Liquor Control Board to the state’s General Fund, took an incremental step forward Wednesday when the LCB noted it is moving to engage the right team of advisors to enter into the certificate of participation that would actualize the securitization.
“We understand the urgency driving this issue for the Governor’s Budget Office, and we are working as quickly as possible to contract with legal and financial advisors well-versed in this kind of transaction,” said PLCB board member Michael Newsome. “Once they are on board, we can begin evaluating the details of the financing in hopes of closing a deal before the end of the year.”
Board Chairman Tim Holden promised to continue working collaboratively with the administration to effect the securitization and provide the $1.25 billion cash infusion to help balance the state’s books.
Meanwhile, the governor announced that his internal directive to save money and create government efficiencies, dubbed “GO-TIME,” has exceeded its $150 million annual savings goal for the second straight year, this time saving the commonwealth $217 million.
“We are changing the way the state does business to make government more efficient and achieve real savings for taxpayers,” Gov. Wolf said. “We are creating a government that works and will continue to build on these successes to assure tax dollars are spent wisely and important programs and services are protected. This is not just about saving money – it is also about delivering better customer service and driving state government into the 21st century with better technology and tools.”
GO-TIME savings are accounted for in a reduction of a rate of increase in requested appropriations.
Combined two-year savings for the GO-TIME initiative now total $371 million. Wolf reasserted the $150 million annual savings goal for GO-TIME in the coming year.
“I am trying to make sure we manage those fiscal challenges in a responsible way,” he said. “You can’t simply cut services and you can’t simply raise taxes; you have to find a little way to figure out how to streamline government so that we are doing the things that the people of Pennsylvania want us to do and we aren’t dipping our hands into their pockets to do things the same old way we’ve done before.”
Jason Gottesman is the Harrisburg Bureau Chief of The PLS Reporter, a news website dedicated to covering Pennsylvania’s government.