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State treasurer approves short-term line of credit during budget impasse

State Treasurer Joe Torsella - (Photo / Amy Spangler)

State Treasurer Joe Torsella has approved a two-week $750 million line of credit to keep the state’s general fund in the black while lawmakers work to iron out a revenue plan for the 2017-18 budget.

The Senate passed a $2.2 billion revenue package last week to help balance the $32 billion budget for the fiscal year that began July 1, but the House has yet to act on the plan.

Torsella said the line of credit will be available Aug. 14 to Aug. 28.

Without corrective budget action by lawmakers, the general fund balance will become negative in early September and will remain so for two-thirds of the fiscal year, he said. Projected borrowing would need to be as much as $3 billion.

Torsella and state Auditor General Eugene DePasquale, who backed the treasurer’s line of credit, have been urging the General Assembly to finalize the state budget.

“The House must do the responsible thing and come back next week to address this budget situation,” DePasquale said. “And once they are back, the House and Senate leadership and the governor should immediately lock themselves in a room and work until they figure out a way to provide Pennsylvanians with a balanced budget.”

Last month, Standard & Poor’s placed the commonwealth’s credit rating on “negative watch” over the budget. A downgrade would increase debt service costs and limit future borrowing options.

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