Pennsylvania’s Senate on Tuesday afternoon approved a bill to put its capital, Harrisburg, into receivership.
The bill returns to the House for concurrence in the Senate’s technical changes. The House possibly would consider it later in the day.
In a 37-to-13 vote, the Senate moved along a bill that would enable Gov. Tom Corbett to declare a fiscal emergency and name a receiver. Corbett has said he would sign the bill.
The legislation, however, is ensnared in a legal web that includes last week’s bankruptcy petition by Harrisburg’s City Council. Federal bankruptcy Judge Mary France has scheduled a hearing for Nov. 23 in Harrisburg on the legality of the council’s petition, which Mayor Linda Thompson, the state, Dauphin County and several creditors oppose.
State Sen. Jeffrey Piccola, R-Susquehanna Valley, whose district includes parts of Harrisburg, said the new law is necessary because the City Council three times rejected a financial recovery plan proposed under the state’s Act 47 program for distressed communities.
While the bill did not specify Harrisburg by name, references to “cities of the third class” were clearly aimed at the 48,000-population city, which is $310 million in debt due to an incinerator retrofit project. Pennsylvania categorizes its cities by classes, or population tiers.
While Harrisburg has been skipping payments on the incinerator, it is current in its general obligation bond payments. Its current GO debt is about $60 million.
“Specifically, Harrisburg is the cause du jour,” Piccola said in floor debate Tuesday.
Piccola’s co-sponsor is Rep. Glen Grell, R-Hampden Township, whose Cumberland County constituency sits across the Susquehanna River from Harrisburg and opposes a commuter tax, which some city politicians favor.
“The bankruptcy filing recently approved by City Council is illegal and demonstrates the majority’s inability and absolute flagrant disregard in governing the city in a responsible manner. This ongoing, reckless behavior has become a national embarrassment,” Piccola added.
A state law, passed in June as an amendment to the fiscal code, prevents Harrisburg from filing for bankruptcy until July 1, 2012, though some critics say that measure may also face a legal challenge.
Meanwhile, the council’s lawyer argued that the bankruptcy filing supersedes any state legislation. “We welcome the governor to the bankruptcy court. He can sit with everybody else,” said Mark Schwartz.
“The governor is trying to keep the lid from blowing off as perhaps a dozen municipalities should file for bankruptcy, which would actually address their situation,” Schwartz added, citing financial troubles in Pittsburgh, Scranton and Altoona.
According to the bill, once the emergency is declared, the governor may petition Commonwealth Court, one of Pennsylvania’s two statewide intermediate appellate courts, to appoint a receiver for the city. Once appointed, the receiver could create a long-term recovery plan for the city and implement the plan as needed.
The bill calls for a 30-day period for the city and state to work out a compromise plan.
It would also include an advisory panel responsible for providing feedback to the receiver. Thompson, who as mayor would sit on that advisory board, has been seeking an expanded role for that board.
“I did not support this bill, but I will work diligently with all parties involved in the recovery process,” Thompson said Tuesday.