Pennsylvania’s two top fiscal officers sent out a strongly worded letter to legislators and the governor Wednesday, warning them that the commonwealth’s finances are dangerously strained.
Treasurer Joe Torsella and Auditor General Eugene DePasquale say the situation is bad enough that the state could be forced to seek loans from outside of government if significant changes aren’t made.
How significant? With the fiscal year almost over, the state’s revenues are over a billion dollars below expectations, and that’s on top of an even larger structural deficit. Torsella and DePasquale said the shortfalls are a sign budgets haven’t been properly balanced for a few years.
As a result, they project a negative general fund balance for eight months out of the next fiscal year — worse than in any year in at least a decade.
It’s common for the state to borrow some money every year — usually the treasury can extend a credit line to cover immediate costs, which is cheaper than getting loans from any other source. But this year, Torsella said the amount needed is probably too much.
“That’s not a threat, as it were,” he said. “It’s a statement of mathematical fact. There is a point at which the ability to finance this internally is exhausted. And as we look at a negative balance that’s both larger and longer than what we’ve experienced, both the Auditor General and I — we see that point coming.”
DePasquale said using outside loans isn’t sustainable.
“If this is not addressed in a serious way, real program cuts are going to have to happen simply to pay the interest on what it’s going to cost down the line,” he said. “The borrowing is going to have cost.”
The officers say the state could be forced to seek an outside lender as soon as next month.
Asked if they had any recommendations, the two officials — both Democrats — concurred.
“My recommendation is that the budget should be really balanced, not fake balanced,” DePasquale said.
Torsella laughed. “I second that.”
The legislature is in the early stages of intensive budget negotiations. As in previous years, members are struggling to agree on a way to bring in enough savings or new revenue to legitimately stabilize the plan.
In a statement, the office of Democratic Governor Tom Wolf said he appreciates “the Treasurer and Auditor General’s support on tackling this important issue.”