Harrisburg Council Must Hike Tax, Pennsylvania Judge Says

Harrisburg’s City Council must double an income-tax rate on residents to help pay for essential services in Pennsylvania’s capital, a state judge ruled.

The tax would climb to 2 percent from 1 percent for a year under the ruling yesterday by Commonwealth Court Judge Bonnie Leadbetter. The move was sought by William B. Lynch, the state receiver trying to fix a financial crisis in the insolvent city of almost 49,700.

“The judge made the wrong decision,” said Councilman Brad Koplinski, who said the council would consider an appeal. “This is unfair to the people of Harrisburg.”

The city, where 30 percent of residents live in poverty, owes more than $300 million on debt tied to an overhaul and expansion of a trash-to-energy plant that doesn’t produce enough revenue to cover the obligations. Besides boosting the tax, which would yield about $5.1 million in 2013, Lynch’s plan calls for the sale of municipal assets, including the incinerator.

“We’re in dire straits here,” said Cory Angell, a spokesman for Lynch. “We need that funding source to help the city provide basic services.”

City creditors aren’t bending to do their part, according to Dan Miller, the city’s controller.

“This is us giving a concession when no one else is,” Miller said of the ruling.

Currently, Harrisburg residents pay 0.5 percent on earned income to the city, while an equal amount is collected by the local school district. The entire 1 percentage point increase will go to city coffers.

The receiver case is C. Alan Walker v. Harrisburg Authority, 569-MD-2011, Pennsylvania Commonwealth Court, Pennsylvania (Harrisburg).

To contact the reporters on this story: Romy Varghese in Philadelphia at rvarghese8@bloomberg.net; Steven Church in Wilmington, Delaware at schurch3@bloomberg.net.

To contact the editor responsible for this story: Mary Romano at mromano6@bloomberg.net

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