State will appoint coordinator to assist in debt resolution
To virtually no one’s surprise, the state has declared its capital city of Harrisburg a “distressed city” and will soon appoint a coordinator to help develop a business plan to overcome a myriad of financial problems.
The ruling, under state Act 47, was announced Wednesday by Austin Burke, state Secretary of the Department of Community and Economic Development (DCED). Mr. Burke has 30 days to appoint the private sector coordinator who will head a private team of experts in debt and litigation analysis, city and state government contracting and negotiation.
That team will bring together city and Dauphin County officials, short and long term debt and bond holders with city contracts, unions and other parties with legal claims on city resources. The ultimate goal is to have all stakeholders agree they will be receiving less than they may want or be legally entitled to, but more than they would obtain through multiple, conflicting law suits and a continuing municipal crisis.
Harrisburg is the 20th Pennsylvania city to actively be under Act 47.
The city of 47,000 had a very difficult time simply making payroll over the last two months.
Mayor Linda Thompson, who has been in office slightly less than a year, was upbeat about the ruling.
“This is important first step on the city’s road to fiscal recovery. There will be difficult choices to be made by the city’s leaders as we craft a comprehensive long term recovery plan,” said Ms. Thompson.
“We have an opportunity to become the model for comeback cities and it is my intention to seize that opportunity,” she said.
Ms. Thompson unseated 28-year-incumbent mayor and fellow Democrat Stephen Reed in a primary and eventually won the 2009 mayoral election. Since taking office, she has continually been at loggerheads with City Council and City Controller Dan Miller.
Mr. Miller was guardedly optimistic about the Act 47 ruling and said much will depend on what the coordinator and the team put together.
“Borrowing is not the answer. That is not addressing the problem,” Mr. Miller said. “Selling city assets is not the answer.”
He said next year’s city operating budget, now being developed by City Council, is far above what the city can anticipate in 2011 revenues.
If the coordinator is a hard line budget-cutter, Mr. Miller said, it would likely be a good thing.
“You could probably cut city spending significantly and city residents would probably not even notice it,” Mr. Miller said.
The city qualified for Act 47 by failing to meet debt obligations and having claims exceeding 30 percent of the city’s budget with no ability to negotiate a resolution or adjustment, Mr. Burke said.
