Pennsylvania Gov. Tom Corbett late Monday declared a fiscal emergency in Harrisburg, calling the move necessary to ensure maintenance of vital municipal services.
Last week, the General Assembly passed legislation calling for a state takeover of the state’s capital city, which Corbett signed. The city is about $310 million in debt related to incinerator retrofit cost overruns, and has skipped about $65 million in bond payments.
The City Council has filed a Chapter 9 bankruptcy petition, which the state is contesting. Judge Mary France of the U.S. Bankruptcy Court for the Middle District of Pennsylvania in Harrisburg is expected to rule on the validity of the bankruptcy filing on Nov. 23.
Three times, the council rejected a recovery plan recommended under the state’s Act 47 program for distressed communities, in which Harrisburg enrolled last December. Last week’s legislation amended Act 47, the 1987 law that created the program.
“The City Council’s failure to enact a recovery plan in order to deal with the city’s distressed finances has led me to declare a fiscal emergency,” Corbett said in a statement. “This action ensures that vital services will continue and public safety will be protected.”
As a result of the declaration, the governor within 10 days will direct the secretary of the Department of Community and Economic Development to develop an emergency action plan for the city to coordinate vital services and ensure public safety. Services include police and firefighting, water and wastewater, trash collection, payroll, and pension and debt payments.
During a fiscal emergency, said Corbett, the city’s authorities and elected officials will continue to carry out the duties of their respective offices as long as no decision or action conflicts with the emergency action plan.
Mayor Linda Thompson said she would meet with DCED officials and call for yet another City Council public meeting. “This is the council’s last chance to get to the table and be part of the process or get out of the way when the state receiver steps in,” she said. “If we don’t attempt to solve our own fiscal problems, the alternatives will be far worse.”
Mark Schwartz, the Bryn Mawr, Pa., attorney representing Harrisburg’s City Council, labeled the takeover bill “legally dubious.” He called Act 47 ineffective and said the state should tackle local property tax overhaul to best help struggling cities. Twenty-six communities are in Act 47.
“The fact is that being labeled financially distressed in Pennsylvania is like checking into the Bates Motel. One almost never leaves,” he said.
