Harrisburg, the capital of Pennsylvania mulls Chapter 9 bankruptcy protection
The capital of Pennsylvania is debating if a chapter 9 bankruptcy filing is the right thing to do. The city is also looking at raising taxes and selling government assets. Harrisburg faces $68 million in debt payments due this year.
Every option, including tax and fee increases, bankruptcy and a state takeover through Pennsylvania’s Act 47 municipal oversight program will be considered, said Susan Brown-Wilson, chairwoman of the Budget and Finance Committee, which began a week of hearings last night to consider a 2010 spending plan.
The $68 million in debt service payments that Harrisburg faces in connection with the construction of a waste incinerator this year is four times what the city of 47,000 expects to raise through property taxes, and $4 million more than the city’s entire proposed operating budget.
“We need to see, what does Act 47 do for us; what does bankruptcy do,” Wilson said in an interview during a break in the opening budget hearing at Harrisburg City Hall. “You have to have all of them on the table.”
Harrisburg skipped more than $3.5 million in debt-service and swap payments last year, prompting draws on reserves and back-up payments by Dauphin County, where Harrisburg is located. The county has sued the city to recover its payments. […]
[…] “There’s never been a default like this in Pennsylvania municipal history,” she said. “This is all new territory.” […] (Bloomberg)
As I have talked about over the past many months, states and local governments will continue to be stressed and facing rising budget problems. There will be more stories like this one in the coming months.
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