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Pennsylvania lawmakers ignore debt to boost borrowing

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By Mike Wereschagin and Brad Bumsted
Monday, Oct. 15, 2012, 12:01 a.m.
 

For all the talk in Harrisburg about cutting the state's debt, lawmakers seem to find it easier to add to it.

The state House recently passed a Senate bill authorizing $1.7 billion in borrowing; a House bill that would have lowered the state's debt limit has languished in the Senate for seven months.

Interest on the $1.7 billion debt limit increase will cost state taxpayers between $2.3 billion and $2.5 billion over 20 years, according to fiscal notes attached to the House and Senate bills, respectively. The House assumes an interest rate of 3.25 percent and the Senate, 4 percent.

“At the same time we're incurring all this debt, we have huge pension needs and infrastructure problems,” said state Rep. Daryl Metcalfe, R-Cranberry.

The money will go for everything from repairing bridges to buying furniture to refurbishing and fixing state-owned property. The bill authorizes borrowing $345 million for the Redevelopment Assistance Capital Program, an economic development program that's been the focus of fierce debate for years.

Members of the House and Senate said they don't know exactly which capital projects will get the money. Gov. Tom Corbett's administration told them that it needed $345 million, and the Legislature authorized the borrowing without getting a list of projects needing money, several General Assembly members and staffers said.

All come from a list of economic and community development projects the Legislature approved, some as far back as 1986. Most never progress beyond the planning stage. Each has conditions that must be met to trigger the state's share of the cost — often matching money and construction progress.

“We have an apparatus in place that goes out and continually monitors these programs to make sure they are in compliance, so that we can ensure that our taxpayer dollars are being used appropriately,” said budget office spokesman Jay Pagni, who works for Corbett.

Not paying that money exposes the state to lawsuits, said House GOP spokesman Stephen Miskin.

“We're under contract,” Miskin said. “It was basically either pay now or default and probably be sued and pay higher rates.”

Miskin said most of the projects got approval during former Gov. Ed Rendell's two terms. About 52,000 were approved during that time; the remaining 2,600 were approved earlier, according to the state's list. They included the Arlen Specter Library at Philadelphia University and the John P. Murtha Center for Public Policy at the University of Pittsburgh's Johnstown campus.

“I was opposed to the Rendell projects,” said Rep. Nick Kotik, a Coraopolis Democrat who voted against the borrowing bill. “I can't support those kind of projects (such as the Specter Library) when I've got water and sewer projects that are worthy.”

The Corbett administration changed the guidelines for new redevelopment projects to a merit-based system meant to prioritize the projects by economic rather than political effects. The guidelines cap annual capital project spending at $125 million and apply the criteria to existing projects.

The House passed a bill in March that would gradually lower the Redevelopment Assistance Capital Program's debt limit, from slightly more than $4 billion to $1.5 billion. It would require the governor to list redevelopment projects he wants to fund before the Legislature votes on providing the money. House Republican Leader Mike Turzai introduced the bill, pending before the Senate Appropriations Committee since June. Turzai, R-Bradford Woods, voted for the capital bill.

“We all know we need debt reform,” Miskin said. “We believe it can be done before the session ends.”

State Sen. John Eichelberger asked why the Legislature voted to allow more borrowing when people agree the debt is too high. Eichelberger, R-Altoona, was one of two state senators to vote against the measure on June 20. It passed the House 145-55 on Oct. 3.

Low interest rates, held down by the global economic slowdown and the Federal Reserve, mean the state can borrow money relatively cheaply.

“That's like a guy who wants to sell you a car and tells you he can get you a really good deal on it. If you can't afford it, you just don't do it,” Eichelberger said.

The state borrows at fixed rates, Pagni said.

Legislators put items onto the capital projects list with little scrutiny from colleagues, said Sen. Jake Corman, R-Centre County, who sponsored this year's Capital Budget Act.

“Whenever a legislator wants to authorize something for his district, everyone gives their respect to that legislator,” Corman said.

Merely making it onto the list does not guarantee funding, Corman said. The governor decides which projects get money, he said.

“I don't want to micromanage what every one of 253 legislators feel should get funded in their district,” Corman said. “The executive branch has the whole state to be concerned about, and they will prioritize accordingly.”

Mike Wereschagin and Brad Bumsted are staff writers for Trib Total Media. Wereschagin can be reached at 412-320-7900 or mwereschagin@tribweb.com. Bumsted can be reached at 717-787-1405 or bbumsted@tribweb.com.

 

 
 


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