NEW YORK - Pennsylvania lawmakers over the weekend extended the bankruptcy ban for distressed capital Harrisburg by another five months to Nov. 30, despite opposition to the measure by the city's state-appointed receiver.
Gov. Tom Corbett was expected to sign the measure, which the General Assembly attached as an amendment to the state's fiscal code.
The controversial bill affects a city mired in roughly $310 million of bond debt mostly tied to a costly incinerator retrofit. Receiver William Lynch, a retired Air Force major general, wants to avoid bankruptcy but feels the threat of a Chapter 9 filing could help force major creditors to make concessions.
Some local officials, notably Controller Dan Miller and five of seven City Council members, argue that pulling the bankruptcy option favors Wall Street creditors at the expense of local taxpayers. "I don't know how we're going to get through this without bankruptcy," Miller said.
Lynch said last week that Harrisburg could run out of money in October. After the moratorium expires, he could file for bankruptcy on behalf of the city, with permission from the state Department of Community and Economic Development.
City Council member Brad Koplinski blamed state Sen. Jeffrey Piccola, R-Susquehanna Valley, a suburban lawmaker whose district includes parts of 49,000-population Harrisburg, for masterminding last year's ban on behalf of corporate creditors and continuing it this year. Piccola is not running for re-election.
"It is evident that the real generals here are Piccola and Corbett, who have thrown up the white flag - surrendering to the monied interests and leaving the overburdened people of Harrisburg, people who had no role in getting us into this mess, to pay the bill," Koplinski said.
"It doesn't make sense," added Rep. Ron Buxton, D-Harrisburg, who opposed the ban. "Authority has already been taken away from the city."
Mayor Linda Thompson has opposed bankruptcy since taking office in 2010, but recently spoke out against extending the ban, which applied to so-called third class cities. Pennsylvania tiers its cities by population.
"Certainly Harrisburg's problems have to be addressed," said Corbett, who on Saturday signed a $27.7 billion budget.
Anthony Sabino, a business professor at St. John's University in New York, called the extension a political decision and legally safe, "but whether it's right is debatable on many levels."
He added: "Is it proper for the totality of Pennsylvania, which is wonderfully wide and diverse, to decide what's best for one community? At the state level some people don't want Harrisburg calling the shots, and maybe in some respects that's necessary because Harrisburg's local officials have made a few missteps."
Rep. Glen Grell, R-Hampden Township, a co-sponsor with Piccola last year, voted to continue the ban. "When I see the Harrisburg City Council working against proposed changes recommended by the governor and the receiver, and in doing so taking resources that were meant to help the city, I believe it probably does make sense to extend that moratorium in the fiscal code," Grell said.
The council filed for Chapter 9 bankruptcy protection last fall, but a federal judge invalidated the move, saying it violated the state law and needed the mayor's approval.
A lawsuit Miller and five City Council members filed in federal court last week called the takeover law unconstitutional because it unfairly targeted Harrisburg.
