Mayor Linda Thompson implored Harrisburg City Council members to approve her financial recovery plan, which will go before the council for a final vote at a special legislative session next Wednesday.

"We will either pull together as a team and alleviate our city's financial crisis, or we will not. There is no perfect plan and there is no middle ground," Thompson said at a public meeting in Pennsylvania's capital city Tuesday night.

Thompson's plan largely mirrors the one recommended by a consultant under the state's Act 47 program for distressed communities. It would include the sale of Harrisburg's incinerator and the long-term lease of downtown parking garages, although she said she would also seek a commuter tax, which a Dauphin County court would have to approve.

Thompson won't seek a 1% sales tax. "As appealing as it appears, it simply is not possible," she said.

Both supporters and opponents of Thompson's plan admitted that enacting a commuter tax would be difficult. "It's no Club Med," said Brad Koplinski, one of the council's most vocal critics of Act 47.

Council President and Thompson political ally Gloria Martin-Roberts concurred, saying, "It's difficult and something I don't know whether all the council members have thought through."

The earlier recovery plan, crafted by Novak Consulting Group, lost by a 4-to-3 vote, so Thompson must sway at least one of the dissenters to her side.

Realizing her proposal may fail, Thompson said she has written Gov. Tom Corbett about additional state aid, if necessary.

Harrisburg owes roughly $300 million related to a costly incinerator retrofit project.

Bonds outstanding on the incinerator four miles southeast of downtown total $220 million, while the city also owes a combined $75.5 million to the county, bond insurer Assured Guaranty Financial Corp. and the incinerator's operator, the Harrisburg Authority.

The Lancaster County Solid Waste Management Authority, a neighboring incinerator agency, has offered $124 million for the Harrisburg facility.

The city is in danger of running out of money by mid-September, when a $3.3 million general obligation bond payment is due.

The Act 47 plan would still leave Harrisburg facing $26 million in stranded debt.

"There's some concern that the numbers don't really add up," Koplinski said. "We've got to make sure because if we pass this plan, we're stuck with this plan."

Last month, Koplinski, Wanda Williams, Susan Brown-Wilson and Eugenia Smith opposed the Act 47 plan, while Patty Kim, Kelly Summerford and Martin-Roberts voted for it.

Martin-Roberts on Tuesday warned about dire consequence if the city fails to act.

"We will definitely lose money from the state, [and] certainly the stakeholders will not be amenable to meeting with us at some point," she said.

Failure to implement a plan would prompt Pennsylvania to withhold grants, loans and payments to Harrisburg and its agencies, according to the state Department of Community and Economic Development.

Bill Cluck, a local attorney and a Harrisburg Authority member, criticized Thompson. "This plan is an embarrassment," he said. "There are no changes made from the mayor's plan to the revised plan."

Thompson told the council that its refusal so far to accept Act 47 could jeopardize further negotiations with stakeholders. Dauphin County and Assured Guaranty have litigation pending against Harrisburg.

"That house of cards is fragile," she said, adding that Assured Guaranty will not negotiate further in advance of the council vote. "Vote yes for my plan and I will move forward with that negotiation and all other negotiations, to eliminate the incinerator-related debt in full. Vote no against the plan, and I will move forward to maintain the support of the state and county and AGM as the chief executive of this city."

Bankruptcy options may be limited. Corbett signed a bill, which the legislature passed late in its session in June, restricting filings for Chapter 9 protection by communities in Act 47 under the threat of losing state aid.

Also on Tuesday, the council approved putting up for sale the remainder of artifacts that Thompson's predecessor, Stephen Reed, had collected hoping to open a Wild West museum.

The city auctioned off $1.4 million in related artifacts in 2007.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.