HARRISBURG — As the budget impasse in Pennsylvania drags on, at least six counties are considering taking out lines of credit to manage expenses. This financial maneuver could ultimately burden taxpayers with debt as the state continues to miss critical payments totaling billions of dollars.
County governments are left with limited options. Many are depleting their own reserves, cutting essential services, or laying off employees. Bill Glasgall, an adviser at the Volcker Alliance, emphasized that budget disputes are frequently driven by fiscal conservatism, which aims to limit government spending. However, he noted that such standoffs carry their own costs. “Somebody’s gotta pay the price,” he remarked.
Counties serve as a crucial frontline for public services, including foster care and drug treatment programs. The ongoing budget delays also affect nonprofits and public schools, leaving them without necessary funding. Unlike county workers, state lawmakers are insulated from the immediate effects of the budget crisis; they continue to receive salaries and benefits, even as their constituents bear the impact.
In counties with robust financial positions, the situation is still challenging. For instance, Dauphin County has lost approximately $300,000 in interest income after tapping into its reserves. Commissioner Justin Douglas pointed out that “each passing day without a state budget results in further losses.”
Some counties have already begun furloughing employees due to the budget delay. Northampton, Armstrong, and Westmoreland counties are among those affected. Armstrong County has closed senior centers and terminated staff, while Westmoreland County is preparing to furlough 125 employees should the budget remain unresolved by mid-October.
The situation in Northampton County is particularly dire. If a state budget is not passed by October 20, the county plans to lay off all its human services workers, totaling 175 employees out of 250. County Executive Lamont McClure expressed frustration, blaming the Senate’s inaction for the predicament. “To demand that they pay again through county taxes… is unconscionable,” he stated.
Steve Catanese, president of SEIU 668, which represents the affected workers, suggested that while he understands McClure’s concerns, taking out loans may be a necessary step. “In an ideal world, they wouldn’t have to. But you don’t burn your house down because you might not be able to make a mortgage payment,” he noted.
This dilemma highlights the catch-22 that counties face. Borrowing money to cover short-term expenses could lead to long-term financial repercussions due to accruing interest rates, which can range from 4% to 7%.
In response to the crisis, Pennsylvania State Treasurer Stacy Garrity announced a $500 million loan program aimed at assisting counties and Head Start providers during the ongoing impasse. The funds would come from the state’s unappropriated cash reserves, and while the loans will incur interest, Garrity plans to offer them at 4.5%.
Republican leaders in the state Senate are working on legislation that would forgive interest on these loans while requiring repayment of the principal. Appropriations Committee Chair Scott Martin expressed appreciation for Garrity’s proactive measures to prevent service disruptions.
The current budget stalemate stems from significant disagreements regarding the state’s fiscal future. Despite having nearly $11 billion in cash reserves, these funds have diminished as expenditures have outpaced tax revenues. Senate Republicans are resisting substantial increases to the current $47.6 billion budget, while Governor Josh Shapiro and House Democrats argue for necessary recurring funding in areas like education and healthcare.
Negotiations have fluctuated since the budget deadline of June 30 passed, with lawmakers making intermittent public assurances that a resolution is near. However, despite some concessions from Democrats, private discussions have yet to yield a concrete agreement.
In a statement, Shapiro spokesperson Rosie Lapowsky urged Senate Republicans to cease political maneuvering and collaborate with the House to finalize a budget. “There is no excuse for their inability to pass a budget with $11 billion sitting in the bank – it’s past time for them to do their jobs,” she added.
While state employees are still compensated due to a 2010 court ruling, the ramifications of the budget impasse are increasingly severe for many organizations. For example, the Children’s Home of York, which provides crucial services like foster care, is facing a monthly loss of $47,000 due to counties withholding payments. President and CEO Ron Bunce emphasized the organization’s commitment to care, stating, “We have kids in our care that we’re responsible for, and we have to continue to provide that level of care.”
The Children’s Home of York has increased its line of credit, but Bunce warned that if the stalemate continues, accruing debt may become their only viable option. “We need the state to be a reliable partner,” he concluded. “Public-private partnerships only work when both sides are held accountable.”