Harrisburg, Pennsylvania, the capital of the sixth-largest U.S. state by population, should skip a $2.2 million debt service payment due Feb. 1 and consider bankruptcy, City Controller Dan Miller said.
Harrisburg faces $68 million in payments this year in connection with a waste-to-energy incinerator and should weigh Chapter 9 protection from creditors or state oversight through a program known as Act 47, Miller said today. Chapter 9 bankruptcy allows municipalities to reorganize rather than liquidate.
The alternatives are to sell assets such as an historic downtown market; an island in the Susquehanna River that includes the city’s minor-league baseball stadium; and the city’s parking, sewer and water systems, according to a preliminary 2010 budget and an emergency financial plan submitted yesterday.
“What I’m suggesting is we stop paying the debt service until we have a plan or we decide which way to go, in bankruptcy or Act 47,” Miller, a former city council member who became controller this month, said in a telephone interview. “I think it could save our assets instead of selling them.”
Mayor Linda Thompson, who unseated 18-year incumbent Mayor Stephen Reed in a Democratic party primary last year to lead the city of 47,000, didn’t return a call to her office for comment.
Thompson is scheduled to present her budget proposal to the city council tonight. The council has until Feb. 15 to adopt a final budget.
Asset Sales, Fees
Management Partners Inc. of Cincinnati, a consulting firm hired to study the city’s finances, recommended selling assets, raising city inspection and recreation fees, and reopening city labor contracts.
Harrisburg owes a total of $68 million in payments it guaranteed on bonds issued by the Harrisburg Authority for the incinerator and on a $35 million working capital loan for the project.
The city 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, which has sued the city to recover its payments.
Harrisburg’s debt was downgraded to high-yield, high-risk junk status by Moody’s Investors Service in October. Moody’s lowered the city’s rating to Ba2 from Baa2, the second-lowest investment grade.
The city’s credit rating could be lowered further after an analysis of the steps taken to address future payments on debt and two interest-rate swaps that are costing about $800,000 a year, Moody’s said in an Oct. 19 report.
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i live a bout 70 miles from harrisburg what i see happenning in the united states is the greedy company owners are about to get a hell of a lot richer i use to work 52 hours a week i would get 12 hours a week over time pay witch is pretty good pay every week but now the company i work for was bought by a bigger company and now i will work only 36 hours a week 3 days a week at 12 hour shifts the new company is going to hire twice as many people and work 6 days a week half the workers will work 3 days a week and the other half will work 3 days a week so now the company wont have to pay over time to the workers if you work over 40 hours a week the company has to pay you time and half time so what this ads up to is the rich in the united states are going to get a lot richer and the poor are going to get a lot poorer i may be wrong but i think it is only a matter of time until a war breaks out in the united states
The headline of this article is incorrect. The article clearly refers to the possibility of bankruptcy for the city of Harrisburg, Pennsylvania, NOT the state government.
Great News…
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