State capital in deep financial trouble
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HARRISBURG -- The capital city of Pennsylvania, facing a budget deficit for 2011 and several hundred million dollars in municipal debt, is edging closer to a financial takeover by the state.
This city of 50,000 may not be able to make a $3.3 million bond payment that is due to lenders by midweek. It's part of the $300 million that is owed for several refinancings of funds borrowed over the years to fix a faulty municipal trash incinerator, which has had many problems. The large amount of state buildings and other tax-exempt property reduces property taxes to city coffers.
The city has had trouble scraping together $1 million to pay its 500 municipal workers on Thursday and another $1 million for Sept. 29, but Robert Philbin, an aide to Mayor Linda Thompson, said last week he now expects the workers to be paid on time. Talks are ongoing to avoid the incinerator bond default, but the city has an additional $90 million in general obligation bonds to repay.
City controller Dan Miller, with whom Ms. Thompson has been at odds, said the city's $56 million budget for this year looks like it will be $4 million short unless debt negotiations with lenders produce additional money. The Miller-Thompson friction increased last week, when he disclosed he'll run against her in 2013.
The seven-member city council, which also has bickered with Ms. Thompson, has twice rejected financial bailout plans, angering Gov. Tom Corbett and Republicans who run the Legislature. One plan -- 400 pages long, developed by state consultants under Act 47 of 1987 -- was voted down 4-3 in July. Ms. Thompson then revised that plan, and even though it had support from Mr. Corbett, council rejected it 10 days ago on an identical vote.
Harrisburg finances "are a mess," said longtime political observer G. Terry Madonna of Franklin & Marshall College.
"It's definitely a serious situation," said Rep. Glen Grell, R-Cumberland, whose suburban Harrisburg district lies just west of the capital. He is preparing one of two measures aimed at giving the state greater control over the city's finances.
The other bill comes from Sen. Jeffrey Piccola, R-Dauphin. It was approved by the Senate in June and could go before the House in late September. It would create a three-member, state-appointed committee to implement the state's July financial recovery plan. Act 47 now covers about 20 distressed municipalities, including Pittsburgh, Philadelphia and Reading.
First Published September 11, 2011 12:00 am
