Pennsylvania Treasurer Stacy Garrity announced Wednesday her office would launch a $500 million plan to provide loans to county governments and pre-K programs facing financial problems caused by the months-late state budget.
“We have no greater responsibility than to take care of our most vulnerable Pennsylvanians, and that’s exactly what’s being achieved by making these funds available,” Garrity said.
The announcement comes as Garrity’s gubernatorial campaign has repeatedly attempted to hang the budget impasse on Democratic incumbent Gov. Josh Shapiro.
Garrity, a Republican reelected to her office last year, said in a statement that her department is working to “bridge the gap” in funding via the new loan program.
Eligible county governments and Head Start providers will be privately contacted by Treasury staff, according to agency officials. The office did not provide details about what would qualify a county or agency for the loans.
Recipients of a short-term loan to cover operating costs must agree to pay it back in full — including interest at a 4.5% annual rate — within 15 days of a state budget being enacted, officials said. The $500 million that will fund the loans will come from the Treasury’s $21 billion Liquid Asset Pool.
School districts, counties and other human service providers have gone since July 1 without state funds, and many are seeking private lines of credit to cover their expenses.
Lancaster County Commissioner Josh Parsons, York County Commissioner Julie Wheeler and Montgomery County Commissioner Tom DiBello — all Republicans — spoke in favor of the Treasury’s loan program at a news conference in Harrisburg on Wednesday.
Parsons said some counties are running out of cash, causing them to consider tax increases.
“(I’m) hopeful that this will provide a lifeline to counties in this difficult time,” he said.
Kyle Kopko, executive director of the County Commissioners Association of Pennsylvania, said in an interview that many of the state’s 67 counties will be faced with tough choices if state funding does not resume in October.
“It is definitely a real possibility that we could lose staff and providers and not be able to attract them back whenever funding is restored,” Kopko said. He noted the nine-month budget impasse that began in 2015 led to a loss of institutional memory and talent that was difficult to replace.
Garrity said her office chose to open the funds for counties and pre-K providers to “start somewhere” after the groups contacted her office, but she is open to considering loans for other groups down the road.
Playing politics
In campaign videos and at the state GOP meeting last Saturday in State College, Garrity has said the delayed state budget is due to Shapiro’s inadequate leadership.
After she secured the GOP endorsement on Saturday, she said the demands of running for governor would not affect her official duties at the Treasury Department. But Garrity’s announcement caught flak from at least one rank-and-file Democrat, who pointed out the potential conflict of interest.
“It’s almost like Garrity’s allies in the state (Legislature) have engineered a crisis to her political (benefit),” wrote Philadelphia Rep. Ben Waxman on social media.
Garrity addressed the optics during a news conference on Wednesday.
“Let me be clear — this has absolutely nothing to do with my candidacy for governor,” Garrity said. “I am here as the Treasurer of Pennsylvania.”
She also said the budget impasse was “maybe” one of the final things that prompted her to enter the race.
Lawmakers’ responses
Garrity’s announcement of the short-term loan program sparked finger-pointing in the Capitol.
Shapiro’s press secretary, Rosie Lapowsky, sidestepped Garrity’s announcement when asked for comment, and instead called on Senate Republicans to return to Harrisburg to finalize budget talks.
“The governor introduced his budget plan 232 days ago, and Senate Republicans have been in session just 29 days since then — it’s past time for them to do their jobs and send a budget to the governor’s desk for signature,” Lapowsky said.
Beth Rementer, a spokeswoman for House Majority Leader Matt Bradford, D-Montgomery, echoed a similar sentiment about the GOP.
“Early education providers and local governments deserve real, sustainable funding, not a short-term loan at 5% interest,” Rementer said.
Meanwhile, Senate Majority Leader Joe Pittman, R-Indiana, said Garrity’s loan program “would not be necessary but for the unwillingness of the House to join the Senate in August and enact last year’s spending plan, to prevent the very impacts the Treasurer is addressing now.”
Senate Republicans this week announced that senators would return to the Capitol for voting session days beginning on Oct. 6, “to continue to position the Senate to effectuate a budget,” according to caucus spokeswoman Kate Flessner.