Pa. Treasury reports making $21 million in bridge loans as state budget impasse continues

Pennsylvania Treasurer Stacy Garrity said Tuesday her office has provided more than $21 million in loans to four dozen organizations to continue operating during the state budget impasse.

The office started the $500 million Budget Bridge Loan Program in September to support county governments and Head Start local agencies, which provide education, health and social services to families with children aged 3 to 5.

Earlier this month, it expanded the program to support organizations that contract with county governments to provide services for rape survivors and pre-k children, as well as domestic violence prevention support.

Garrity, who is also running in the Republican primary for governor next year, announced that her office approved 24 new organizations to bring the total number  to 48.

“Pennsylvanians, especially the most vulnerable, should never have to pay the price for a budget stalemate,” Garrity said in a statement. “Treasury is committed to working diligently with applicants so funds can be delivered as quickly as possible.”

Meanwhile on Monday and Tuesday, House and Senate leaders from both parties met with Gov. Josh Shapiro in his office as both chambers returned to session this week.

Top lawmakers including Senate Majority Leader Joe Pittman (R-Indiana), Senate President Pro Tempore Kim Ward (R-Westmoreland), House Majority Leader Matt Bradford (D-Montgomery) and House Speaker Joanna McClinton (D-Philadelphia) were tight lipped about the negotiations leaving the governor’s office Tuesday afternoon.

A spokesperson for Shapiro said it had no updates on the budget process..

Shapiro introduced a $51.5 billion spending plan in February that included increases in state funding for education and transit but also proposed new revenue from taxes on legalized adult-use recreational marijuana and Skill Games.

In July, the House passed a pared-down version of Shapiro’s plan without the new revenue and about a $900 million reduction in overall spending. The Senate responded in August by passing a budget bill that would keep spending at 2024-2025 levels.

On Oct. 8, the 100th day after the June 30 budget deadline, the House passed a second Democratic-led proposal that further reduced spending to $50.25 billion, as House and Senate leaders traded barbs in Capitol news conferences.

Last week, the Senate passed a second budget proposal with a modest spending increase over last fiscal year. At $47.9 billion, however, it struck most of Shapiro’s new spending and Democrats warned of the consequences of not fully funding schools and social safety net programs.

As the budget deadline passed without an agreement this summer, county and school officials across the commonwealth warned that their available funding would start to dry up by September. As a result counties and school districts have been forced to spend reserves, take out revenue anticipation loans or cut services. Those that take out loans will be responsible for interest that cannot be recouped.

In the case of county governments, the cuts affected social safety net services provided by private agencies under contract.

The Treasury loans must be repaid with 4.5% interest within 10 days of receiving state funding after a budget is approved. The Senate passed a bill this month to allow Garrity’s office to waive the interest and it awaits consideration in the House.