What Happens If Pennsylvania Runs Out of Money Sept. 15 - NBC 10 Philadelphia

What Happens If Pennsylvania Runs Out of Money Sept. 15

If Pennsylvania goes broke Friday, Gov. Wolf will have some tough choices to make: what to fund and what not to fund in expenses

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    The state's general fund will hit zero Friday, Sept. 15. Republican lawmakers in the state House, who control the legislative chamber, may hold a vote to approve a funding plan for the 2017-2018 budget and avoid the state going broke. Currently, the budget is $2.2 billion underfunded.

    (Published Wednesday, Sept. 13, 2017)

    UPDATE: The GOP-penned measure passed with a 103-91 vote late Wednesday night. It's now being sent to the Senate. New details HERE


    Months after Pennsylvania lawmakers adopted a budget without a way to pay for all of the approved spending, the state is finally on the eve of "running out of money," as the Treasurer's office describes it.

    Come Friday, Sept. 15, the state coffers will be empty, like a giant treasure chest plucked of its last gold coins.

    So what happens to say, state workers' paychecks? Or payouts for services rendered, like medical providers for Medicaid recipients? Or even something like, Pennsylvania's reputation?

    The Treasurer's office has some answers about the immediate future. (Uncertainty about longer term spending on things like education, infrastructure projects and other parts of government that falls under the discretion of the governor's office remains. We'll update this list as details become available.)

    State payroll: The roughly 104,000 public employees in state jobs will have about $150-160 million coming to them in paychecks Friday. That kind of money, incredibly, won't really break the bank. Some revenue still comes in each month. It's just not enough — $2.2 billion not enough over the course of the 2017-2018 fiscal year. So if the state House doesn't pass a revenue package soon, the mounting deficit could eventually present problems for employees.

    Medicaid payments:  Every month, the state pays out roughly $2 billion in Medicaid funds to medical providers throughout the state. That is not an amount that the Treasurer's office will be able to stretch if there is no House revenue plan in place. "There's not enough money to go to all these medical providers who have already provided services," Treasury spokesman Mike Connolly said. 

    Credit rating: The fiscal dysfunction in Harrisburg has not been lost on credit rating agencies like Moody's and Standard&Poor's, which have warned that Pennsylvania's rating will be dropped again. Going broke will surely expedite the agency's downgrade, Connolly said. "And that is a backdoor tax, because it then costs more to borrow" for infrastructure, for schools, for preservation projects.

    House Republicans, who are in the majority, have been meeting all week to try to get a plan in place to fully fund the 2017-2018 budget. Though lawmakers seemed to inch closer Wednesday afternoon, some had warned earlier in the week that negotiations could stretch into the weekend. By then, the state would already be out of cash.