Harrisburg, Pa. council rejects recovery plan

Reuters News
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Posted: Aug 31, 2011 8:19 PM
Harrisburg, Pa. council rejects recovery plan

HARRISBURG, Pennsylvania (Reuters) - Pennsylvania's capital of Harrisburg rejected a rescue plan designed to address its debt crisis on Wednesday, in a move that could prompt a state takeover of its finances.

In an 4-3 vote, the Harrisburg City Council rejected a plan put forward by Mayor Linda Thompson. The vote came less than two months after the council rejected another plan presented by a state-appointed advisor.

Harrisburg -- a city of 50,000 about 100 miles west of Philadelphia -- is one of a handful of U.S. cities and counties that have teetered toward economic collapse in the wake of the 2007-09 recession. A string of failures could rattle the $2.9 trillion U.S. municipal debt market.

The mayor has said that Harrisburg could run of money next month, meaning it could miss a September 15 bond payment and be unable to pay city workers.

(Reporting by Edith Honan, editing by Anthony Boadle)