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Tap lawmakers' surplus fund for interest reimbursements

The drumbeat that has begun for state reimbursement of interest paid by social services providers, school districts and counties on money they borrowed due to the 101-day state budget impasse has an easy, but probably unlikely, solution.

The General Assembly easily could provide the money in question from its legislative surplus account — the pot of money that lawmakers began stashing away either during the gubernatorial term of Richard Thornburgh or Robert P. Casey.

Back in the summer of 2005, when the previously undisclosed fund first became general public knowledge, lawmakers disagreed on when the money began being put aside.

The purpose of the fund is to insulate the Legislature from a governor holding the Legislature hostage — for example, during a protracted budget dispute like the one the commonwealth just has endured.

Back in 2005, when its existence was publicized, the closely guarded pool of money totaled $135 million (recently estimated at more than $200 million). If and how much that special fund might have been impacted by the 2009-10 budget morass has yet to be disclosed, but it's safe to surmise that the General Assembly has more than enough money to pay for the financial harm that its inability to reach a budget settlement for more than three months inflicted on counties, school districts, social service providers and others.

And, after reimbursing those harmed, it's safe to conclude that lawmakers would have more than enough money left to protect them in their next battle — whenever that might be — with the state government's executive branch.

Meanwhile, since the Governor's Office had such a major hand in prolonging the budget battle, a good-faith gesture on its part would be to kick in a couple of million dollars from its operating budget to help repair the fiscal damage that the budget battle caused.

However, from both the General Assembly and governor, it's doubtful such generosity will materialize — at least, not with their "own" money.

Tony Ross, president of United Way of Pennsylvania, said social service agencies in the state might have borrowed enough money to keep themselves afloat to incur interest of $5 million to $10 million.

Doug Hill, executive director of the County Commissioners Association of Pennsylvania — of which Butler County Commissioner James Kennedy serves as board president — said he would raise the issue during a meeting with administration officials. He said Wednesday that the association hadn't compiled any estimate regarding the money in question.

Kennedy said Wednesday that the Butler County commissioners were facing the prospect of having to borrow money in what he described as the very near future. He said the county had avoided the need to borrow by moving money back and forth between accounts.

Kennedy expressed the opinion that lawmakers in Harrisburg "don't have a clue" of the challenges counties and local communities face.

Tom Gentzel, executive director of the Pennsylvania School Boards Association, said his organization will make a similar request for reimbursement after districts receive their overdue subsidies.

Rendell said Friday that he hadn't considered the matter of reimbursing entities for interest paid on money borrowed during the budget stalemate. To many who incurred interest costs, that came as somewhat of a surprise, considering that at the conclusion of a long dispute in 2003 over funding public school operations and instruction, Rendell and lawmakers provided an additional $4.6 million to cover interest on money that the school districts had borrowed during the dispute.

The school funding impasse that year extended to Dec. 23 — yet another negative chapter in the state's legislative history.

"I'm willing to take a look at it (reimbursement of interest), but we'd have to know what the total was," Rendell said.

Based on the number of affected entities this year and the borrowing steps they took to remain in operation, the $4.6 million figure of 2003 might not cover half of the total interest incurred over the past three months.

Under different circumstances, it might have been deemed inappropriate to ask the state for reimbursement of interest costs. After all, despite passage of the 2009-10 fiscal package, the commonwealth still remains in a precarious financial situation.

However, with the Legislature's stash of surplus money, there's no excuse for forcing those who suffered severe financial challenges over the past three months to endure ongoing money hardships resulting from a problem they didn't create.

Entities that incurred interest costs should be reimbursed, but not from the state's General Fund.

The General Assembly and Governor's Office should pay for the budget havoc that they wreaked. The drumbeat on that behalf must grow louder.

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