Pennsylvania will go broke Friday and the state treasurer says he would not bail out the state again as it faces the ignominious distinction of failing to pay all its bills for the first time.
The state's general fund will run dry following more than two months of failed efforts in the General Assembly to close a $2.2 billion budget deficit.
The first bill that will not be fully paid is a roughly $2 billion Medicaid payment to eight medical insurance providers, officials said.
For weeks, Treasurer Joe Torsella has warned state lawmakers that the general fund would run out of money Sept. 15. He previously issued a short-term loan to allow the government to meet its financial obligations through August. But he said more recently he would not issue another loan through what is called the Short-Term Investment Program (STIP).
Torsella seemed inclined earlier in the week to issue another loan if the General Assembly approved a funding package that balances the 2017-2018 budget. The $32 billion budget was approved in June by the Republican-controlled General Assembly even though lawmakers knew of the revenue shortfall.
The House did narrowly approve a funding package late Wednesday night. It relies on transfers of money from funds dedicated to transportation, environmental protection and numerous other state programs as well as future expected revenue.
"As of right now, we are not updating our position," Torsella's spokesman, Mike Connolly, said Thursday, adding that the treasurer needs to see a balanced budget before another loan would be considered.
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Gov. Tom Wolf, who will decide what bills will go unpaid Friday, expressed dissatisfaction with the House package. His spokesman, J.J. Abbott, told PennLive.com that it "fails the basic test of solving the fiscal problems."
On Thursday, he said more details would be released Friday morning about problems facing the state in paying its bills.
Here's a detailed look at what immediately happens when the general fund goes to zero.
