More CFA problems: The debt bomb
Heavily redacting the content of emails that should be mostly public might not be the worst of the problems for Pennsylvania's secretive Commonwealth Financing Authority (CFA) and its parent, the state Department of Community and Economic Development (DCED).
A review of authority audits by the Allegheny Institute's Jake Haulk shows a deepening morass of debt for which the public, as per usual, could be left on the hook. Mr. Haulk, a Ph.D. economist, says those audits show a “net asset position” at the end of fiscal 2012-13 was “negative $760 million.” And the authority is obligated to pay debt service of $147.9 million annually through 2042.
The law that created the authority says CFA debt doesn't violate the Pennsylvania Constitution's prohibition (Article VIII, Section 8) against pledging the commonwealth's credit. Yet the audits mention a state pledge to seek annual appropriations for the authority's debt service. “And therein lies the problem,” Haulk says.
The $80 million that DCED provides annually will leave the authority, which lacks its own revenue source, about $67 million short of its debt-service needs. Haulk warns that sooner or later, the state will have to raise taxes or cut core functions — “either of which would be a de facto constitutional violation” — to honor its authority debt service commitment.
Halting further authority borrowing would help avoid that scenario.
But beyond that, taxpayers newly aware of the Commonwealth Financing Authority's debt bomb must demand that they not be stuck with the bill for cleaning up a mess created — and hidden — by the authority, the DCED and their Harrisburg protection racket.