Senate Republican leaders in Pennsylvania have announced plans to introduce legislation that would forgive interest on loans made available to counties and Head Start providers during the ongoing state budget impasse. The move follows an announcement by State Treasurer Stacy Garrity, who offered up to $500 million in loans at a 4.5 percent interest rate to help qualifying entities cover necessary expenses while the state budget remains unresolved.
Treasurer Garrity’s initiative was designed to provide immediate financial relief as the absence of a finalized budget left many organizations without expected funding. Under current law, the Treasury is required to charge interest on these loans even though money continues to flow into the Treasury and accrues interest.
Senate President Pro Tempore Kim Ward addressed this issue, stating, “Last week Treasurer Garrity made a bold and important move to help keep monies flowing to counties by giving them the ability to borrow from the Treasury at the lowest rate possible during this budget impasse. The law requires the Treasurer to charge interest on lending despite money continuing to flow into the Treasury and not being dispersed but collecting interest. As such, we plan to offer legislation to provide forgiveness on the interest for those loans to ensure services don’t suffer while we continue to finalize a state budget.”
Majority Leader Joe Pittman highlighted previous legislative efforts and ongoing negotiations: “In August, the Senate passed legislation to enact last year’s spending plan, to prevent the very impacts the Treasurer is addressing now. While work to complete a 2025-26 budget agreement continues, the steps taken by Treasury are a way to provide immediate relief, and our legislation will mitigate further negative effects by forgiving interest accrued. We remain focused on effectuating a final spending plan that respects taxpayers, while allowing Pennsylvania to grow.”
Appropriations Chair Scott Martin drew from his own experience as a former County Commissioner during a prior budget impasse: “As a former County Commissioner who served during a prolonged state budget impasse in 2015, I understand the challenges presented by a delayed budget. It’s very much why I am hopeful those challenges, including the need for accrued interest costs, could be minimized by the House passage of the plan the Senate approved in mid-August to get state and federal funding out the door without further delay. I appreciate Treasurer Garrity taking action to prevent any disruption of services, and this complimentary action will ensure more state dollars can be put to good use in serving people in need, as we work on this bill to minimize cost impact to our partners even more.”
The Senate Republicans’ proposed legislation comes amid continued negotiations with Governor Shapiro and House Democrats over how best to resolve Pennsylvania’s fiscal challenges.
