Harrisburg, Pa., could miss another general obligation bond payment in mid-September in order to make payroll and could run out of cash altogether by the end of next month, a state official said Wednesday.
Fred Reddig of the state Department of Community and Economic Development updated state-appointed receiver William Lynch at a City Hall meeting of the Municipal Financial Recovery Advisory Committee, the Patriot-News of Harrisburg reported.
Harrisburg has more than $310 million in bond debt that it cannot pay, largely due to an incinerator project.
On Thursday, the Commonwealth Court of Pennsylvania will rule on a request by Lynch to force the City Council of the state's capital city to triple its earned-income tax, to 1.5% from 0.5%.
Redding said Lynch's office will soon decide whether to skip $3.4 million worth of GO payments due Sept. 15, according to the newspaper.
Lynch's predecessor, David Unkovic, skipped a $5.3 million GO payment in early March. He quit as receiver later that month.
Last September, Harrisburg made its GO payments by securing a $7.4 million, 10-year lease extension with the Harrisburg Parking Authority, which sold taxable debt at a 10.75% coupon to make the up-front lease payment to the city.
Local attorney William Cluck asked Reddig about the latest uncertainty.
"What's going to happen Oct. 1 if we don't have money?," said Cluck, a board member of the Harrisburg Authority public works agency that runs the incinerator.
"If we're out of cash, do we do what Scranton did and pay the police and firefighters minimum wage? I think the reality is that we won't make payroll on Oct. 1 or whatever the time period is. What's the plan?"