The new Harrisburg, Pa., City Council has time to prepare a defense in its fight with the state-appointed receiver over the tripling of the earned-income tax.
Neil Grover, the attorney for the taxpayer group Harrisburg Debt Watch, has agreed to represent the seven-member council, which approved him unanimously on Monday night. Grover succeeds Mark Schwartz, a Bryn Mawr, Pa., solo practitioner who resigned last week, saying the city never paid him.
Meanwhile, Judge Bonnie Brigance Leadbetter has rescheduled a hearing in the Commonwealth Court of Pennsylvania over receiver William Lynch’s tax initiative from Wednesday to Aug. 14.
Grover must file an answer to Lynch’s petition for a writ of mandamus, or order, by Aug. 3.
Cost overruns for an incinerator retrofit project have left Harrisburg with $310 million of bond debt that it cannot pay. Lynch favors selling the incinerator and other assets and increasing the earned-income tax to 1.5% from 0.5% as part of the city’s recovery plan, while the council opposes it.
Grover said in an interview that the case will test whether a state-appointed receiver can force a locally elected body to impose or increase a tax.
He said the tax increase would unfairly burden Harrisburg taxpayers, and that major creditors should make concessions.
“People are making up rules as they go along,” he said. “Throughout the course of this, only the City Council has been protecting the local taxpayers. The receiver’s office wants to negotiate after the assets are sold and the taxes are raised. We‘re demanding that creditors be part of the solution.”
He may also have a legal battle to raise money for his expenses — against the very party that is suing the council.
Grover cited a conference call last week in which Lynch’s attorney, Mark Kaufman of McKenna Long & Aldridge LLP, said the receiver could block the funds the council wants to release to pay Grover.
“He was saying to the effect that we’re not waiting in the weeds or anything, but we’re not conceding that the receiver would release the funds,” Grover said. “That made me very angry. I’ve never seen that tone with a public official before; maybe in commercial litigation.”
“We’re in bare-knuckled litigation,” Grover said. “The pressure points will be put on.”
Grover joined the Pennsylvania bar in 1988. He earned undergraduate and law degrees from LaSalle University and Catholic University of America, respectively.
Two local attorneys, Lee Morrison and Paul Rossi, will assist him. Rossi is representing five of seven City Council members is a lawsuit in federal court challenging the constitutionality of the receivership.
Grover said he and his team would charge $85 per hour. "Some of our opposing attorneys are charging $1,000 per hour," he said.
A message seeking comment was left with Kaufman.
Kaufman, in a letter to Leadbetter, accused the council of stonewalling.
“City Council’s five months of delay with regard to the EIT initiative reflects what appears to be a broader objective … to flummox the receiver at every turn and frustrate his ability to implement the court-confirmed recovery plan and attempt to achieve a consensual solution to the city’s fiscal distress,” he said.
