The fate of Pennsylvania’s financially troubled capital city, Harrisburg, took another twist in a long road Thursday, when Gov. Tom Corbett signed a bill permitting him to place the city into receivership.
By signing Senate Bill 1151 into law, Corbett opened the way for him to declare a fiscal emergency in Harrisburg. The governor is aiming to wrest control of the city’s finances from local government, which has been stuck in a standoff for months. The City Council has repeatedly rejected efforts by Mayor Linda D. Thompson to impose a financial recovery plan, and last week, it filed a Chapter 9 petition in federal bankruptcy court, a move that Thompson and Corbett immediately declared illegal.
Kelli Roberts, a spokeswoman for the governor, said Corbett planned to file a petition in state court to place the city into receivership but would probably not do so this week.
The city’s troubles stem from a failed trash incinerator project that has saddled Harrisburg with $310 million in debt, more than quadruple its annual budget. On Thursday, the city announced it would not have the funds to pay for a holiday parade this year.
City Council members who have opposed Thompson’s plans have also fought the bill, saying it robs Harrisburg of self-rule. The members, who are supported by a group of local residents, say Chapter 9, a special bankruptcy statute for municipalities, would give the city more leverage in dealing with its many creditors.
But the state has strongly opposed bankruptcy, in part because it would tarnish the reputation of the capital. It argues that the state has the authority to sort out the city’s problems, and the bill signed by Corbett on Thursday would be one of its tools.
At a news conference in Harrisburg, Thompson expressed regret that the state would most likely take over the financial workings of the city. The bill allows one last chance for the city to agree on its own financial rescue plan, and she outlined steps she would take to comply. If that fails, the state will be obliged to step in, she said.