By JOHN WHITTAKER

jwhittaker@post-journal.com

Not only are Republicans and Democrats unable to pass a state budget, now they’re dickering over how to help counties and school districts that are taking out loans during the more than 100-day-old budget impasse.

Both sides agree that local governments and agencies that take out loans to cover expenses during the state’s budget impasse shouldn’t have to pay interest on those loans. They don’t agree on how to provide that measure of relief.

In a party line vote Wednesday, the state Senate passed Senate Bill 1040, which would authorize the state treasurer to waive interest charges on loans issued during a budget impasse and help prevent additional costs for taxpayers and communities. Under current law, the Pennsylvania Treasurer may provide investment loans during a budget impasse but must charge interest on those loans. Senate Bill 1040 would authorize the state treasurer to waive interest charges on loans issued during a budget impasse and help prevent additional costs for taxpayers and communities.

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“Senate Republicans advanced important legislation today to support Treasurer Garrity’s Bridge Loan Program by offering forgiveness on the interest rates on those loans under section 301.1 of the fiscal code,” said Sen. Kim Ward, R-Greensburg and Senate president pro tempore. “These low interest loans will help alleviate financial pressures on counties, early education, rape and domestic violence programs and the program has been approved by the Pennsylvania Attorney General’s Office. I applaud this bold and innovative approach offered by Treasurer Garrity and am pleased we can support this measure as we work through a budget that is balanced and does not raise taxes on Pennsylvanians.”

The Senate bill works with the Budget Bridge Loan program announced recently by Stacey Garrity, state treasurer and Republican candidate for governor, which would provide up to $500 million in low-interest loans from the Liquid Asset Pool Investment Fund for county governments, domestic violence and rape crisis centers, Head Start agencies and approved providers under the Pre-K Counts program. Those investment loans would cover up to 25% of a recipient’s state budget appropriation from the previous fiscal year.

The legislation specifies that a budgetary impasse includes periods beginning July 1, 2025, and July 1, 2026, and ending on the effective dates of the General Appropriations Acts for the 2025-26 and 2026-27 fiscal years.

The bill now moves to the House of Representatives for consideration, where its future is murky given Democrats’ response to Senate Bill 1040. Senate Democrats backed a proposal by Sen. Lindsey Williams, D-Pittsburgh. Williams on Wednesday introduced a co-sponsorship memorandum for legislation that would use a combination of interest the state has earned by not having passed a timely budget and the Rainy Day Fund to back fill any interest accrued by any entity that receives state funding who was forced to take out loans during this budget impasse, including counties, human service agencies, non-profit agencies, childcare centers, and schools.

“I hear from my constituents and from people and organizations across Pennsylvania about the pain that this late budget is causing them daily. People are losing their jobs, rape crisis centers are shutting down, foster parents aren’t getting paid, senior centers are closing, children aren’t receiving the services they need to thrive, all because Pennsylvania has not passed a budget. I have shared some of those stories on the Senate floor over the last few session days,” Williams said. “Our counties, human service agencies, non-profits, childcare centers, and schools should not have to borrow the money that we were constitutionally obligated to provide them back in June. They should not have to drain their reserves or take out loans that require interest payments.”