HARRISBURG — Pennsylvania Treasurer Stacy Garrity stepped in on Wednesday to offer counties and early education programs $500 million in low-interest loans to hold them over until a final state budget deal is complete, sidestepping the General Assembly and Gov. Josh Shapiro as they near the start of a third month at an impasse.
Garrity, a Republican who last month announced her bid to challenge Shapiro in next year’s gubernatorial election, announced the unprecedented move to allow the state Treasury to offer the loans to county human service departments for the many social services they provide, as well as for early education Head Start programs, at a 4.5% interest rate.
Counties, schools, and social service providers have pleaded for months with the legislature to finalize a budget so they can begin receiving their expected state payments, which have been on hold since the beginning of the fiscal year on July 1. Some counties have had to secure private loans to hold them over until state payments begin, while others — including those around the Philadelphia region — have relied on their reserves. Other counties have frozen hiring and spending, as they await a resolution to the budget stalemate.
The move would allow counties to access millions of dollars for early education programs serving 35,000 children across the state, as well as for county social services — all of which have been operating for months without their state appropriation, with no end to the budget impasse in sight.
Garrity’s decision to act unilaterally without the action of the General Assembly allows her to capitalize politically on the ongoing budget crisis over Shapiro, challenging his image as a moderate Democratic governor of a politically “purple” state willing to work across the aisle in a divided legislature. That brand, which he’s been built nationally as he is rumored to have interest in running for president in 2028, has been tested as he’s so far been unable to secure a budget deal or a recurring funding stream for the state’s beleaguered mass transit agencies, including SEPTA.
» READ MORE: Why funding SEPTA in a divided Pennsylvania is one of Gov. Josh Shapiro’s biggest tests yet
Shapiro, for his part, has described his role in budget negotiations to be a go-between for Senate Republicans and House Democrats, who control each of their respective chambers, and said that the two caucuses remain “diametrically opposed” on some issues.
A spokesperson for Shapiro said in a statement Wednesday that the real solution to the budget impasse is for Senate Republicans, whose leaders endorsed Garrity last week, to return to work in Harrisburg to finalize a budget deal with House Democrats. A spokesperson for House Majority Leader Matt Bradford (D., Montgomery) echoed the same sentiment, arguing that Senate Republicans “refuse to negotiate on a realistic budget agreement.”
Senate Majority Leader Joe Pittman (R., Indiana), the Senate’s top negotiator who has met for months for closed-door budget talks with Bradford and Shapiro, said in a statement that it was Democrats who caused the prolonged impasse while demanding they include mass transit funding in the state budget. After mounting pressure as SEPTA enacted major service cuts, Shapiro ultimately sought to fund the agency on his own and the issue will need to be revisited in two years.
» READ MORE: Why there was no deal for SEPTA in Harrisburg after all
Garrity, who kicked off her “Help is on the Way” introductory campaign tour around the state earlier this week, said Wednesday her decision to intervene in the state budget stalemate was not political, despite her burgeoning run against Shapiro. Rather, she said she had been thinking about a way to do so for months, including ahead of her announcement of her run for governor, and that most Pennsylvanians don’t even realize the state budget is late. She argued that if she wanted to be political, she wouldn’t intervene and “keep the pressure” on Shapiro over the late state budget.
“I’m standing up here as Pennsylvania’s state treasurer, not as a candidate for governor,” Garrity said from a podium in the Harrisburg building that houses the state Treasury. “I think I have a responsibility to serve Pennsylvanians, that if I have something that I can do to provide some relief, then I should do it.”
However, that didn’t stop Garrity from inviting Montgomery County Commissioner Tom DiBello — the lone Republican on the board where Shapiro once served — to the press conference podium to deliver some direct criticisms of Shapiro and to praise Garrity’s intervention as a “lifeline” for counties, alongside two other GOP county commissioners from South Central Pennsylvania. While Montgomery County remains one of the wealthiest counties in the state, the late budget has required Pennsylvania’s third-most-populous county to spend down its reserves, money which is Montgomery County usually relies upon to continue earning interest as part of its annual revenue, DiBello said.
“It starts at the top. The governor is responsible,” DiBello said. “He’s got to pull it together. It’s his signature at the end of the day.”
In response to Garrity’s announcement Wednesday, Montgomery County Commissioners Neil Makhija and Jamila Winder, both Democrats, said in a statement that the county needs a final state budget instead of a short-term loan program, urging Senate Republicans to “do their job.”
“A short-term loan at 4.5% interest is the state profiting from a problem of their own making, at the expense of the taxpayers,” the two commissioners added.
DiBello, said he did not believe his invitation to Wednesday’s event had political motivations, adding: “I didn’t even think of that.” He also noted that he has come to Harrisburg to advocate on behalf of counties multiple times before.
Senate President Pro Tempore Kim Ward (R., Westmoreland), who has been one of Shapiro’s biggest critics since his first budget in 2023 and quick to support Garrity’s candidacy, prodded at Shapiro’s pledge to “Get Stuff Done” while praising Garrity’s leadership.
“Today, Treasurer Stacy Garrity made a bold move that shows what ‘get stuff done’ actually looks like,” Ward said, in a statement. “Treasurer Garrity’s leadership is on display as her solution-driven option is exactly what we need, but has been glaringly missing from the present administration.”
Garrity said at the news conference Wednesday she specifically offered the loan program to Head Start programs and county governments’ human service departments, because both had asked her to help them get through the budget impasse. Pennsylvania’s state budget was due by July 1 and it is the only state besides Michigan which that has not yet passed its budget. She said she is willing to offer similar loans to schools or other state-subsidized or funded programs as requested.
The Pennsylvania General Assembly can forgive the interest accrued by counties taking out loans during the budget impasse, Garrity said, adding that she would support legislation that does so.