Wolf to pursue Farm Show borrowing plan to plug deficit
HARRISBURG — Democratic Gov. Tom Wolf's administration said Monday that it will look to borrow against the Pennsylvania Farm Show Complex and Expo Center to help plug a projected $2.2 billion deficit and make payments to schools and human services providers.
It is the second unilateral move in a week announced by Wolf's office to borrow money since efforts stalled last week in the state House of Representatives to pass a tax package the governor had insisted on to help whittle down an entrenched post-recession deficit.
A Farm Show “lease-leaseback” is expected to yield $200 million up front, to be paid back with interest over 29 years, the Wolf administration said.
The administration could not immediately say how much money such a transaction would cost. In an email, Agriculture Secretary Russell Redding told Farm Show commissioners that the state will begin accepting proposals from interested investors.
It would, Redding said, retain full ownership and control of a nearly 1 million-square-foot complex that hosts regional draws, including the Farm Show and expos featuring guns, horses, outdoor recreation, recreational vehicles and home improvements.
The state already issued a request for information on the project in the spring.
The move comes on the heels of Wolf's announcement last week that his administration will look to borrow $1.2 billion against revenue from the state-controlled wine and liquor store system. The scale of long-term borrowing being considered to prop up the state's general operations is unprecedented in Pennsylvania, say current and former state budget officials.
Public finance analysts generally regard borrowing to pay operating costs as bad fiscal practice and a last resort, and the practice of plugging deficits with one-time cash infusions over the last five years has played a prominent role in Pennsylvania's credit rating plunging to the bottom rungs of state ratings.
The departments of the auditor general and the treasury and leaders of the Republican-controlled Senate have not challenged Wolf's borrowing plans, although a top lawyer for the Senate Republicans, Drew Crompton, said he did not have enough details from the administration to determine whether its moves are legal.
State government is three months into its fiscal year without an approved revenue package to fully fund a nearly $32 billion budget bill that lawmakers passed June 30.
Meanwhile, $650 million in aid to five schools — Penn State, Temple and Lincoln universities; the University of Pittsburgh; and the University of Pennsylvania's veterinary school — is stuck in limbo, and Wolf and House Republicans have blamed the failure of a revenue package on each other.
A spokesman for the House Republican majority insisted Wolf's administration cannot unilaterally execute the leaseback arrangement and at a minimum needs approval from the Farm Show Commission.
Wolf's office disputed that, and a member of the Farm Show Commission, David Black, said that as far as he knew the commission does not have to vote on it.
However, Black, as president of the Harrisburg Regional Chamber, said he was concerned that the deal would bite into funding to maintain the huge complex.
“When things need to be cut, government in general will cut back in maintenance on facilities,” Black said. “And as we all know, if you don't do the maintenance on your house over time you're going to have some big bills, and these are some big buildings.”