Keystone flops

13 September 2010 By Martin Hutchinson

It s no surprise Pennsylvania advanced its capital city $3.6 mln to cover an interest payment. Such minor fudges are feasible, especially ahead of an election. But even with a decent economic base, Harrisburg remains close to default. It isn t alone. They can t all be bailed out.

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Pennsylvania has accelerated payment of $1 million and advanced $2.6 million from a state pension fund to Harrisburg, so its capital can avert default on a $3.29 million bond payment. The payment had been expected to be picked up by the bond's insurer, Ambac Assurance. The debt concerned was issued in 1997, has a total outstanding of $51.5 million and a final maturity of 2022.

Pennsylvania had a state budget shortfall of $4.1 billion, 15.6 percent of spending, for the 201011 fiscal year, below the average of 18.7 percent for all states, according to the Center for Budget and Policy Priorities.

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