PHILADELPHIA -- The attorney general of Pennsylvania threw a roadblock in the way of a deal to give financially troubled Philadelphia a cash infusion that city officials expected by the weekend.
Attorney General Ernest D. Preate Jr. questioned whether the state teachers pension fund should provide part of a $150 million emergency loan to the city, which has been struggling to meet payroll and other essential expenses since September, when a $375 million note issue failed on Wall Street.
Bond-rating agencies have slashed ratings on the city's debt to junk-bond levels, the lowest among major U.S. cities.
The notes would keep the city solvent through winter but would not avert a $230.1 million shortfall in projected expenses of $2.195 billion by June 30.
Preate said he would not approve an agreement for the pension fund to buy Philadelphia short-term notes until his concerns are resolved. The attorney general must review all state-agency contracts for form and legality.
"I understand the financial pressure that Philadelphia is under and I am in favor of helping the city," Preate said. "But we will . . . take the time we need to examine the very serious questions that have been raised regarding this highly unusual loan agreement."
City Solicitor Charisse R. Lillie declined to comment on Preate's statements as she hurried to a meeting with Mayor W. Wilson Goode (D). "We think this deal's going to happen tomorrow," she said. "We are proceeding to negotiate."