Pa. moves to settle $3.8 billion debt with U.S.

    Pennsylvania has been borrowing money from the federal government to pay out unemployment compensation claims since 2009, and has run up a nearly $4 billion tab.

    The commonwealth is finally paying off its debt. It’s effectively refinancing a mortgage — or using a second credit card — to foot the bill.

    A bill on its way to Gov. Tom Corbett’s desk authorizes the Treasury Department to issue a $4 billion bond payment. The commonwealth will pay back Washington with the proceeds.

    Rep. Ron Miller, who chairs the House Labor and Industry Committee, says the move will lead to a lower interest rate.

    “Right now we have $3.8 billion of debt with the federal government,” said Miller, R-York. “We’re paying interest on that every year. Last year it was $144 million we’re just throwing out the window.”

    The move put the fiscal conservatives who run Harrisburg in the strange situation of supporting the type of borrowing they’ve been opposing for years.

    House Majority Leader Mike Turzai said this bond issue is unique.

    “This isn’t new debt,” argued Turzai, R-Allegheny. “We already have incurred this debt. And we’ve got to reduce our finance payments, because you can get lower rates right now than what we’re paying to the federal government.”

    The legislation also changes the way unemployment benefits are calculated and distributed.

    Democrats and labor groups worry it will render more than 40,000 people ineligible for future benefits. Pennsylvania AFL-CIO president Rick Bloomingdale denounced the bill, pointing out legislators reduced unemployment compensation spending by more than $100 million a year last June, and imposed tougher eligibility requirements.

    He called the new changes “unreasonable and unfair.”

    Want a digest of WHYY’s programs, events & stories? Sign up for our weekly newsletter.

    It will take 126,000 members this year for great news and programs to thrive. Help us get to 100% of the goal.