GOV. TOM WOLF IN­TENDS TO LEASE

The Bond Buyer - - Front Page - By Paul Bur­ton

the Penn­syl­va­nia Farm Show Com­plex and Expo Cen­ter in Har­ris­burg for $200 mil­lion up­front

Gov. Tom Wolf in­tends to lease to lease the Penn­syl­va­nia Farm Show Com­plex and Expo Cen­ter in Har­ris­burg for $200 mil­lion up­front.

Such a move, which he out­lined in his bud­get pro­posal in Fe­bru­ary, would raise rev­enue for the cash-strapped state, Wolf told re­porters Mon­day.

Penn­syl­va­nia is in the fourth month of its lat­est bud­get im­passe. Wolf on July 10 let a $32 bil­lion spend­ing plan for fis­cal 2018 be­come law with­out his sig­na­ture. The state Se­nate ap­proved a $2.2 bil­lion rev­enue pack­age to bal­ance the bud­get, but the House of Rep­re­sen­ta­tives has balked.

“This fur­ther ac­tion will mean we can make our com­plete pay­ments to lo­cal school dis­tricts and providers of hu­man ser­vices, treat­ment pro­grams, child care and other im­por­tant ser­vices that Penn­syl­va­ni­ans rely on,” Wolf said.

Last week, he called for $1.2 bil­lion of bor­row­ing against state Liquor Con­trol Board prof­its.

His ad­min­is­tra­tion ex­pects to is­sue a re­quest for pro­pos­als this week and the deal could close by year’s end. Un­der the agree­ment, the com­mon­wealth will lease the prop­erty for 29 years to a pri­vate op­er­a­tor while re­tain­ing own­er­ship and con­trol.

The re­view process for pro­pos­als will in­volve mul­ti­ple agen­cies, he said, in­clud­ing the Depart­ment of Agri­cul­ture.

The com­plex, three miles north of downtown Har­ris­burg, hosts the an­nual name­sake agri­cul­tural show, plus au­to­mo­bile shows, sport­ing events and con­ven­tions. Pres­i­dent Trump held a rally there in April to cel­e­brate his first 100 days in of­fice and spoke there while cam­paign­ing.

Wolf is a Democrat. Repub­li­cans con­trol both branches of the leg­is­la­ture. The House is in ses­sion through Oct. 25 while the Se­nate ex­pects to re­con­vene Mon­day.

The gover­nor fa­vors a tax on Mar­cel­lus Shale nat­u­ral gas drilling, though the leg­is­la­ture to date has op­posed it. Wolf has op­posed a House plan in play, say­ing it reck­lessly si­phoned funds from ded­i­cated ac­counts.

Since the fis­cal year be­gan, Penn­syl­va­nia has drawn on a $750 mil­lion short­term loan from the state Trea­sury’s short­term in­vest­ment pool, which it has re­paid, and trans­ferred $700 mil­lion from its mo­tor li­cense fund.

Last month S&P Global Rat­ings down­graded Penn­syl­va­nia’s gen­eral obli­ga­tion bonds to A-plus from AA-mi­nus.

Moody’s In­vestors Ser­vice rates the bonds Aa3 while Fitch Rat­ings as­signs AA-mi­nus.

A res­o­lu­tion of the bud­get that does not move the state to­wards fis­cal bal­ance may lead to more credit rat­ing ac­tion, ac­cord­ing to Loop Cap­i­tal Mar­kets.

“Spreads for state GOs, which had been fallen over the first six months of the year, have in­creased by 5 to 10 ba­sis points in re­cent weeks,” said Loop. Late Septem­ber spreads show Penn­syl­va­nia nearly 60 ba­sis points above the im­plied Mu­nic­i­pal Market Data rate. The stand­off could also af­fect an­cil­lary cred­its, Loop added. The nine-month fis­cal 2016 stale­mate forced school dis­tricts to rely on re­serves and short-term bor­row­ing. ◽

The Farm Show com­plex lease was in­cluded in Gov. Tom Wolf’s state bud­get.

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