Pennsylvania Governor Takes Control of Harrisburg Finances


A follow-up to a story from last week: Governor Tom Corbett of Pennsylvania has signed a bill that would allow him to take over the troubled finances of the capital city, Harrisburg, which has been busy trying to go bankrupt, as various factions of the local government declare they’re done talking to each other.

As the local ABC News affiliate, WHTM, reports:

Gov. Tom Corbett this morning signed into law Senate Bill 1151, a measure that allows him to intervene in Harrisburg City’s financial crisis.

The legislation allows the governor to declare a fiscal emergency and appoint someone to create and implement a state-sanctioned fiscal recovery plan.

Corbett is expected to declare a fiscal emergency in Harrisburg as early next week.

In signing the measure, Corbett said that he remains “a strong proponent for municipal governments tackling their own problems,” but said when that “fails to happen, the state has to take action to ensure public safety.”

He said the bill will help to enforce recovery plans presented by state-appointed consultants under the municipal aid law often referred to as Act 47, making it clear that the state will intervene if municipalities fail to adopt the plans.

So this measure could be applied to other municipalities, if they drift down the debt-fueled, boondoggle-lined path Harrisburg has chosen.  Selling the insanely expensive incinerator that kicked off the city’s debt crisis is apparently an item on the Governor’s recovery plan, along with leasing out the parking garages.  According to the New York Times, the city’s ill-fated incinerator “saddled it with $310 million in debt, more than quadruple its annual budget.”

WHTM News reports that the city council members who thought they could solve their problems with a quick bankruptcy filing, and a little of that “debt forgiveness” magic that’s in the air these days, are not taking the Governor’s impending takeover well:

A fiscal note prepared by a the House Committee on Appropriations this week estimated that placing the city under receivership would cost between $2.15 and $2.55 million, with the direct cost to Harrisburg expected to be $1.1 to $1.55 million.

The four city council members who rejected the Act47 plan – Eugenia Smith, Susan Brown Wilson, Wanda Williams and Brad Koplinski – have called the legislation “un-American” and said the people of Harrisburg “will be subjected to exorbitant property tax and other increases.”

Council has filed a petition for Chapter 9 bankruptcy protection because they believe some of the city’s debt would be forgiven.

[Harrisburg mayor Linda] Thompson and state officials said the bankruptcy filing is illegal and want the judge to throw out the case, but an attorney for Council has said the federal bankruptcy proceeding trumps a state takeover.

A U.S. Bankruptcy judge has set Nov. 23 as the first date to hear arguments in the petition.

The bill signed by the Governor also blocks Harrisburg from instituting a “commuter tax” on non-residents, which gives you some idea of how the city council was planning to clean up the debt they couldn’t erase by strong-arming their creditors. 

There’s a “one last chance” provision after the Governor declares a fiscal emergency, so perhaps the city council will rise to the occasion and produce a responsible recovery plan of their own.  I get the impression from a review of local media that most residents of Harrisburg aren’t holding their breaths.  This won’t be the last municipality to confront the painful end of a mad spending spree.