Republican leaders in the state Senate said Tuesday they plan to introduce legislation to forgive the interest payments on Treasury loans designed to help county governments and Head Start providers weather Pennsylvania’s budget impasse.
“They should not be penalized because of what is happening here in Harrisburg,” state Senate President Pro Tempore Kim Ward, R-Hempfield, said in a phone interview.
Last week, Treasurer Stacy Garrity announced plans to lend up to $500 million to county governments and Head Start providers feeling the strain of the budget impasse, which reached 92 days on Tuesday.
Money for the Budget Bridge Loan program is coming from the Treasury’s $21.3 billion Liquid Asset Pool investment fund. County governments and Head Start providers will be eligible to borrow up to 25% of their state budget appropriations from last fiscal year.
Entities will be required to pay back what they borrowed, plus 4.5% interest, within 15 days of receiving state funding after the budget impasse ends. Garrity said she was required by state law to charge the interest. That would translate to combined interest payments of up to $22.5 million.
“Here we are, we are holding money that should be in the coffers of these organizations and we’re getting interest on that money. I don’t think it’s fair to then turn around and charge interest on (loans to) these organizations,” Ward said.
Ward, along with Senate Majority Leader Joe Pittman of Indiana and Appropriations Chair Scott Martin of Lancaster, said they plan to introduce legislation in the Republican-controlled Senate to forgive the interest payments on the Treasury loans. It would then need to pass the Democratic-controlled House and be signed by Gov. Josh Shapiro, a Democrat from Montgomery County.
This story will be updated.