Impact of Budget Impasse Spreads; Non-Profits, Taxpayers Could Foot the Bill
By Pat Loeb
PHILADELPHIA (CBS) -- Pennsylvania's state budget impasse is causing many non-profits that provide services for the state to run out of money, according to a survey by the United Way.
They're finding the situation more dire than state legislators, who have continued to get paid through the stand-off, but even the legislature may run out of money for paychecks if a resolution is not reached soon.
Both the non-profits and legislative leaders are looking at taking out lines of credit as their reserve funds dwindle but, in the case of the non-profits, the interest would not be reimbursed by the state. For legislators, interest would be covered by taxpayers.
The United Way survey found half of the providers who responded were having cash flow problems.
More than a quarter were going to curtail services. Sixty percent planned to take out a line of credit to keep operating.
"These survey results have been made available to the legislative and executive branch," says Jim Cawley, CEO and president of the agency's Greater Philadelphia office. "I'm sure they're going to take a hard look at them so they understand the full impact."
Until 2010, legislators would have understood the full impact of the budget impasse all too well. They did not get paid until a budget passed.
But that year, The state Supreme Court ruled the state had to pay civil service employees. Legislative leaders decided that included state senators and representatives.
They've been paid through a surplus fund that legislators appropriate for themselves every year. Last year, on his way out of office, then-Governor Tom Corbett cut the fund and, now, it's in danger of running out.
"It's a very real possibility that we, like social services, are going to have to take a line of credit," says Drew Crompton, chief counsel to Senate majority leader Joe Scarnati.
Crompton did not find it ironic that Senate republicans might opt to run up interest payments in their effort to avoid education spending increases proposed by Governor Tom Wolf.
"I don't really think the nut on interest is really going to be that substantial," he says. "I'd rather pay zero interest but I don't want the optics of not paying interest with a bank either. Then people will ask why I picked that bank and why am I getting zero interest and what favors... it just creates a different dynamic."
Crompton also dismissed calls for the legislature to forego collecting their paychecks during the impasse, as some legislators are already doing.
"Most legislators are being paid. All of the cabinet that (Gov) Wolf has assembled are receiving payments so I'm not sure that's anything more than trying to look good publicly," he says.
"It does take the wind out of the sails, a little bit, of urgency. We see that, but there is plenty of urgency in the building in light of the fact that we're just about to opening day on schools and we hear from social services that the money is tight."
No new budget negotiating sessions have been scheduled.
