Senate Passes Bill to Waive Interest on Short-Term Budget Impasse Loans

HARRISBURG - Pennsylvania counties, early education programs, rape prevention and domestic violence prevention centers could pay no interest on loans from the Pennsylvania Treasury under legislation approved by the Senate, according to Sen. Lisa Baker (R-20), who supported the measure.

Under current law, the Pennsylvania Treasurer may provide investment loans during a budget impasse but must charge interest on those loans. Treasury's Budget Bridge Loan program would provide up to $500 million in low-interest loans from the Liquid Asset Pool Investment Fund for county governments, domestic violence and rape crisis centers, Head Start agencies and approved providers under the Pre-K Counts program.

Those investment loans would cover up to 25% of a recipient's state budget appropriation from the previous fiscal year.

Senate Bill 1040 would authorize the state treasurer to waive interest charges on loans issued during a budget impasse and help prevent additional costs for taxpayers and communities.

"When budget gridlock in Harrisburg delays vital funding, it's the people on the ground who feel it most - the counties keeping services running, the shelters protecting victims and the educators supporting our youngest learners," Baker said. "Waiving interest on these short-term loans is a commonsense step to ease that burden and ensure taxpayer dollars are used for care and service, not unnecessary costs."

The legislation specifies that a budgetary impasse includes periods beginning July 1, 2025, and July 1, 2026, and ending on the effective dates of the General Appropriations Acts for the 2025-26 and 2026-27 fiscal years.

The bill now moves to the House of Representatives for consideration.

CONTACT: Jennifer Wilson