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Pennsylvania on edge of missing payments in budget stalemate

by MARC LEVY, Associated Press

HARRISBURG, Pa. (AP) — The state government appeared on the edge, for the first known time, of missing a payment as a result of not having enough cash on hand amid a feud over how to patch a $2.2 billion budget gap.

Gov. Tom Wolf's office has not revealed how the Democrat will manage through a cash crunch that he has said will leave his administration unable to pay every bill on time, three months into the fiscal year. Beginning Friday, the state's main bank account was projected to go below zero.

Wolf's administration has warned the eight insurers that administer benefits for 2.2 million Medicaid enrollees that they may not receive their monthly payments of about $800 million on time. That would force insurers to borrow money to make timely payments to hospitals, physicians and pharmacies that are required by federal law, they say.

The state previously has gone through extended budget stalemates in which a governor had limited authority to spend and, as a result, put off payments, such as in 2015. The state also has, by law, postponed large, scheduled payments, by a matter of weeks, as a one-time maneuver to help wipe out a projected deficit, such as in 2014.

But Friday was expected to be the first known time that Pennsylvania state government has missed a payment as a result of not having enough cash, state officials said. Wolf has authority to spend, under a nearly $32 billion budget bill lawmakers overwhelmingly passed June 30.

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