Takeover plan for Harrisburg, Pennsylvania detailed

Reuters News
Posted: Sep 27, 2011 3:03 PM
Takeover plan for Harrisburg, Pennsylvania detailed

By Edith Honan

NEW YORK (Reuters) - Pennsylvania lawmakers on Tuesday announced a plan that would make possible a state takeover of the capital of Harrisburg where local officials have failed to resolve a $300 million debt crisis.

State Senator Jeff Piccola and Representative Glen Grell said the deal would allow Governor Tom Corbett to declare a state of fiscal emergency in Harrisburg and develop an emergency action plan to provide for the city's vital services.

The Harrisburg City Council will have one month to adopt a plan to "bring the city on the path to recovery," the lawmakers said in a statement. If it fails, Corbett can petition a judge to appoint a receiver, who will have the ability to create and implement a final long-term recovery plan for the city.

"The city, and for that matter the entire region, cannot afford to have more delay," said Grell. "Harrisburg's fiscal condition impacts us all."

Harrisburg's troubles stem from a complicated financing scheme used to fund a state-of-the-art revamping of its trash-burning incinerator, which left the city saddled with debt.

The bill could go before the two houses of the Republican-controlled state legislature as early as this week. A spokesman for the Republican governor would not immediately comment on whether Corbett would sign it if passed.

Harrisburg is one of a handful of cities that have considered filing for a rare municipal bankruptcy as a way to address fiscal difficulties in the wake of the recession.

Corbett and some lawmakers have opposed such a move for Harrisburg, saying the city would be better off in a rescue plan under the state's program for distressed cities.

In July, the Harrisburg City Council rejected a state-approved rescue plan, which called on it to renegotiate labor deals, cut jobs and sell or lease its most valuable assets, including the incinerator and parking garages.

Last month, the council rejected a similar plan that had been crafted by Mayor Linda Thompson, saying that both plans were overly burdensome for Harrisburg residents and did not ask enough of the county, bond holders and the bond insurer.