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Dousing the Chapter 9 Fire

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Last week we analyzed the financial problems related to the debt owed on an incinerator in the City of Harrisburg. The incinerator is owned by an independent authority, but the City apparently is on the hook for a good portion of the debt.

One of the possible solutions floated to get money to the City is to raise water rates to customers served by the water system (according to the 2008 CAFR for Harrisburg, the same authority runs the incinerator and the water system) which includes both city and suburban users.

Imagine that-using rates for water in order to pay down the debt of another project of the authority. While an official of the Authorities Association of PA was quoted in the Harrisburg Patriot News that such actions are above the board and legal and likely not the first of its kind (Pittsburgh sold its water system to an authority to raise cash, and municipalities likely borrow from similar funds to meet general needs), it would be hard for customers to swallow the fact that they would be paying higher water rates-based on the amount of water they consume-to not fix the water infrastructure but to pay off a bad debt.

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