The Harrisburg, Pa., City Council was scurrying Monday to find legal counsel to answer a lawsuit brought by the city’s receiver demanding that Harrisburg triple the city’s income tax.
William Lynch, the state-appointed receiver since May, filed a motion with the Commonwealth Court of Pennsylvania to require the council to increase the earned-income tax to 1.5% from 0.5% as part of the capital city’s financial recovery plan.
The council was scheduled Monday night to consider hiring counsel to replace Bryn Mawr, Pa., solo practitioner Mark Schwartz, who resigned, saying he hasn’t been paid.
Schwartz’s estimated legal fees totaled about $120,000, although he has said since the council hired him in October that he would accept less, given Harrisburg’s desperate financial condition.
The city has about $310 million in bond debt that it cannot pay largely because of cost overruns to an incinerator retrofit project.
Judge Bonnie Brigance Leadbetter agreed to delay Wednesday’s proceedings to Aug. 14, citing the need to obtain alternate counsel. Lynch had objected through a filing by outside counsel, McKenna Long & Aldridge LLP attorney Mark Kaufman.
“Any claimed 'hardship’ on City Council in obtaining counsel in short order is entirely self-inflicted,” Kaufman wrote, citing the council’s repeated objections to recovery plan provisions. “City Council — one member of which is an attorney — is sophisticated, no stranger to litigation, and fully capable of obtaining able counsel immediately if it determines to act.”
Council member Brad Koplinski, a frequent critic of the receivership process, is a former attorney for the Securities and Exchange Commission.
According to Schwartz, Kaufman said on a conference call that the council could not retain an attorney without an agreement by the receiver. “Kafkaesque,” Schwartz called it.
Neil Grover, an attorney for the taxpayers organization Debt Watch Harrisburg, argued that blocking the council from answering the receiver’s lawsuit amounts to rigging the game. “Mechanisms of government may not be jiggered in such a manner, at least not in a democratic form of government,” he told Leadbetter.
