Pennsylvania Capitol (Peter Hall/Capital-Star)
It’s been 100 days since Pennsylvania lawmakers passed their budget deadline. During this time, counties, school districts and organizations contracted to provide safety net services were unable to receive state funds.
Last month, Treasurer Stacy Garrity, a leading candidate in the Republican primary for governor, offered an interim solution in the form of low-interest loans to county governments and jump-start programs. It has since expanded to include domestic violence prevention and rape support groups.
On Wednesday, the Senate passed a bill that would allow her department to write off interest on those loans.
Two Democrats, Sen. Lisa Boscola (D-Northampton) and Marty Flynn (D-Lackawanna), joined all Republicans in supporting this measure.
Democrats argued that the treasurer had no authority to borrow money and could only make investments. They also said the program as it stands has selectively helped some affected by the shutdowns, such as Head Start programs and district governments, at the expense of others, such as school districts.
Sen. Vincent Hughes (Philadelphia), the minority chairman of the Appropriations Committee, said that instead of approving interest-free loans, the Senate should instead adopt a compromise budget negotiated with the Democratic-controlled House.
Democrats in the House of Representatives lined up to vote on another proposed budget bill Wednesday afternoon, sending it to the Senate. The latest proposal is expected to have a smaller total spending figure than the previous proposal, in an effort to reach a compromise with Republicans.
“There’s no need to deal with, or consider, a fundamentally illegal Treasury program if we just adopt the budget that’s passed,” Hughes said.
But Republicans defended the measure as a way to give the treasury that power and ease the impact of the budget impasse on county governments and social service providers.
“If we had a budget, they would have money,” said Sen. President Pro Tempore Kim Ward (R-Westmoreland). “So I don’t know how to ask them to pay interest on something they should already have in their coffers. It just seems pretty common sense.”
As it stands, Garrity’s lending interest rate of 4.5% means some eligible suppliers have been unable to benefit from the loans. Last week, the Pennsylvania Coalition Against Domestic Violence said the $5.8 million loan it was approved for would result in $260,000 in interest, making it unsustainable.
In a statement, the group called on lawmakers to pass legislation allowing interest-free loans during the budget impasse.
To become law, the bill would have to be passed by the House and signed by Gov. Josh Shapiro.
