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Harrisburg Judge Puts Court-Ordered Tax Increase on Hold

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Sept. 7 (Bloomberg) -- The judge overseeing Harrisburg, Pennsylvania’s receivership put on hold the local income tax increase she ordered last month.

Commonwealth Court Judge Bonnie Leadbetter agreed to reconsider her order at the request of city council members. Lawyers for the council and for the state-appointed receiver who is advocating the tax increase must file court papers laying out their positions later this month. A hearing will be held Oct. 4 if Leadbetter decides to hear more from both sides.

“Nothing in this order shall be construed as any indication that the court deems there to be any merit in any arguments that the parties may raise on reconsideration,” Leadbetter wrote in yesterday’s decision.

Pennsylvania’s capital 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.

The receiver overseeing Harrisburg’s finances, William B. Lynch, is battling city council members who have refused to vote to increase the taxes. Last month, Leadbetter ordered the city’s 1 percent income tax doubled to 2 percent.

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.

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

To contact the reporter on this story: Steven Church in Wilmington, Delaware at schurch3@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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