Harrisburg Gets No Bailout If Plan Is Rejected, Pennsylvania Governor Says
Pennsylvania Governor Tom Corbett won’t bail out Harrisburg if its City Council rejects Mayor Linda Thompson’s fiscal-recovery plan, he said in a letter.
If the city acts “irresponsibly,” state taxpayers won’t be there to foot the bill, Corbett said in the letter, dated Aug. 23 and posted on the city’s website. He said he supports Thompson’s fiscal proposal and urged the council to back it.
“The commonwealth will not bail out the city,” Corbett said, even if a failure to enact a fiscal plan mires the state’s capital in lawsuits and “financial chaos.”
The council will consider Thompson’s fiscal roadmap, including the sale of revenue-producing assets, on Aug. 31. The blueprint mirrors most recommendations made by state-appointed consultants, whose proposal was rejected last month. Harrisburg is grappling with ways to deal with a debt burden from overhauling and expanding an incinerator that has brought the community to the brink of insolvency.
Faced with a $5 million deficit, city officials are trying to arrange for a $7.5 million advance on a lease of municipal land to the Harrisburg Parking Authority. If that fails, $3.3 million in general-obligation bond payments due Sept. 15 may be skipped, said Robert Philbin, a Thompson spokesman.
State Aid Ready
Once a plan is adopted, Pennsylvania “stands ready” to provide an $8 million grant for incinerator improvements, as well as a $5.67 million loan to fix up the city’s sewer system, Corbett said. Harrisburg also would get $2.5 million a year from the state, up from $500,000 currently, to support fire- protection services, he said.
Corbett, a Republican, suggested that a rejection of the mayor’s plan would be “irresponsible” and may lead to legislative action to strip the city of “its ability to make such decisions.”
The Pennsylvania Senate approved legislation to set up a three-member board appointed by Corbett and Dauphin County, which encompasses Harrisburg, to apply the state consultants’ advice. The bill was put on hold in the House of Representatives on June 30 when the past session ended. The Senate reconvenes Sept. 19 and the House, Sept. 26.
The city is barred by a state law, effective until July, to declare bankruptcy and would lose state funds if it tried. Thompson has opposed seeking court protection and said she would seek a commuter tax if the city’s debt wasn’t fully covered.
To contact the reporter on this story: Romy Varghese in Philadelphia at rvarghese8@bloomberg.net.
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.
Rate this Page