Harrisburg Mayor Linda Thompson warned that without a fiscal recovery plan in place, Pennsylvania’s capital city would be unable to pay its nearly 500 workers in mid-September.

Speaking to the City Council on Tuesday, Thompson said that lacking such a plan, the city could make its $3.3 million general obligation bond payment on Sept. 15 but that would leave it short of cash for other purposes.

The city owes $310 million of debt related to an incinerator retrofit project. Bonds outstanding on the incinerator total $220 million, while Harrisburg owes the balance to Dauphin County, bond insurer Assured Guaranty Municipal Corp. of New York, and the facility’s operator, the Harrisburg Authority.

Thompson must convince four of seven council members to approve her plan, which largely mirrors one recommended by a consultant under the state’s Act 47 program, in which Harrisburg joined in December. The council rejected that plan last month by a 4-to-3 vote.

The mayor’s plan varies from the Act 47 plan in asking the state, Dauphin County, and Assured Guaranty to forgive $26 million of stranded debt.

Lacking that, Thompson said she would seek a commuter tax of up to 2.5%

On Tuesday, Thompson said the county has agreed to commit an additional $5 million to her plan, while she said the state plans to increase its fire-protection contribution to $2.5 million annually from $450,000.

Harrisburg must act on Thompson’s proposal by Sept. 6, or risk losing state aid.

Meanwhile, another party has emerged in the possible sale of the troubled incinerator, which sits about four miles southeast of downtown.

Shannon Williams, interim executive director of the Harrisburg Authority, called the overture by the party, which prefers to remain anonymous, as a “letter of interest,” not a bid.

“We haven’t discussed dollar amount yet,” she told The Bond Buyer.

The Lancaster County Solid Waste Management Authority has made two offers, its latest at $124 million, without assumption of debt.

An earlier offer from Jacob Frydman’s LambdaStar Infrastructure Partners LP of New York and EQT Infrastructure Ltd., part of a Stockholm-based private-equity fund, appears out of the mix. That firm hinged its purchase on controlling Harrisburg’s parking garages as well, and according to Williams, the authority has had no further discussions.

“We’re really just dealing with two parties now,” she said.

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