Top officials in city, state oppose loan

The city's attempts to borrow $90 million from the University and other non-profit organizations would be a poor idea, top city and state officials said yesterday. But the head of the state authority overseeing the city's financial situation said he personally does not want to stop the city from borrowing money, though the board has not taken a stand on the issue. The University is one of at least 10 non-profit institutions in the city negotiating a short-term loan to the city to refill the city's drained coffers. City Controller Jonathan Saidel and state Senate Majority Leader Joseph Loeper (R-Delaware Co.) both said the city's attempts to negotiate a loan with several city non-profit organizations would delay the difficult long-term decision making city officials must make. "My impression is that City Council and the city administration have to deal in better faith with the PICA board in order for both to achieve . . . the goals established [for] the PICA board," said Loeper, one of the negotiators of the legislation to create PICA. "[The state government] is not looking for action to circumvent that board," he added. Saidel said the non-profits' willingness to loan the city money would have damaging consequences when those receiving state funding -- such as the University -- ask for more funding from the state. But PICA head Anderson said he feels strongly that the oversight board needs to limit its participation in the affairs of city government. PICA, Anderson said, should not have the power to stop the city from borrowing on its own. The mayor and finance director need to do what they can in order to pay the city's bills, he added. "It's a matter of internal affairs [of the city ]," Anderson said. "Personally, we should not interfere in that process." Anderson pointed out, however, that the city will pay significantly higher interest than it would if PICA were to borrow money on the city's behalf. Saidel also said that state legislators would not understand how universities could loan money to Philadelphia when a few months earlier they were complaining to state legislators that they were strapped for cash. "Every year, [universities] raise tuition, get additional funding -- then they want to loan the city money," Saidel said. Saidel said he may lobby the administrators of non-profit organizations, asking them not to loan the city money -- even if the city runs out of cash. "Elected officials have the responsibility to run the city," Saidel said. This is not the first time Saidel has sought to steer the city away from short-term borrowing. In August 1990, he was instrumental in scuttling a $350 million short-term borrowing plan, helping precipitate a serious cash crisis which has persisted since. At that time, he brought the city's troubled finances to the attention of Wall Street, scaring away many potential investors. The University has stepped in previously to help the city when it had problems paying its bills. Last November, the University pre-paid $10 million in wage taxes -- an amount equal to its tax burden through this June.

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