NEW YORK - Harrisburg Mayor Linda Thompson Tuesday evening released a $56.5 million budget proposal for 2011 that does not include debt-service payments for $282 million of outstanding incinerator debt guaranteed by Pennsylvania’s capital city.
The spending plan, which is smaller than the $64.7 million 2010 budget, does include debt-service payments for the city’s general obligation bonds.
This could be the second year that Harrisburg leaves out principal and interest payments on the incinerator debt from its annual spending plan.
“It is important to once again note that the city’s ongoing operating deficit is separate and apart from any obligation related to the resource recovery facility, more commonly known as the incinerator,” Thompson said in a speech to the City Council Tuesday night, according to a copy of the text.
In March, the mayor vetoed the 2010 budget that the City Council passed as it did not allocate debt-service costs for the incinerator bonds. The council overrode her veto.
Thompson may have omitted the incinerator debt-service payments from her 2011 budget plan because the city may enter into the state’s distressed municipality program, called Act 47, if the Department of Communities and Economic Development approve the application. If Harrisburg were to enter into Act 47, an outside fiscal adviser would help the city craft a fiscal recovery plan that would include the incinerator bonds.
The Harrisburg Authority sold the incinerator bonds but the facility has not generated enough revenue to meet debt-service costs. Harrisburg is the first guarantor of the bonds. Dauphin County, where Harrisburg is located, is co-guarantor of much of the incinerator debt. Dauphin County and Assured Guaranty Municipal Corp, which insures the bonds, have met obligations to bondholders in 2010.
Thompson’s 2011 budget proposal includes the elimination of 75 vacant positions, closing a fire station, transferring police communication requirements to Dauphin County, and transferring surplus funds to the operating budget. The budget does not include increases in the property tax or utility fees, but does propose hiking parking meter fees by $1 to $2.50 per hour beginning Jan. 1, to raise an estimated $625,000 of additional revenue. The mayor is also seeking a parking-tax increase to 20% from 15% to raise an additional $177,750.
The budget proposal also includes a plan to sell real-estate tax liens from 2005 through 2009 to Dauphin County, which could raise $1.9 million for the city’s coffers.
