Distress, and receivership, and bankruptcy, oh my! The continuing effect of Harrisburg’s Resource Recovery Facility-the incinerator-turning the capital city’s finances to smolders continues on as the Governor signed into law what is now known as Act 79, providing for fiscal emergencies in cities of the third class, of which Harrisburg is one.
According to the Governor’s press release, the act gives the City "a final opportunity to develop or agree to a financial recovery plan that is acceptable to the DCED secretary". The City has thirty days altogether, but the plan must be completed and sent to DCED within twenty days. That leaves the remaining ten for review and time to pass an ordinance codifying the plan locally.
If the Council opts not to take that opportunity, then the law triggers an emergency action plan that ensures public safety and other municipal services are carried out at the discretion of the DCED secretary.
Pending behind these two separate courses of action is a Chapter 9 municipal bankruptcy filing, an action that is supposed to get a hearing sometime in November depending on what happens with the provisions of Act 79. One Council member stated "We’re going to be bankrupt in five years anyway" and that "Under the state’s receivership plan…the city would likely have to sell water and sewer assets as well parking garages, but filing bankruptcy now could prevent such drastic measures." That’s taking a leap of faith in that the bankruptcy court could call for remedies that could be quite similar to what the state would attempt; it is unknown, but the Council members advocating for bankruptcy might be hoping to see something similar to what happened in Westfall Township where a $20 million debt was negotiated down to $6 million in bankruptcy court.
But what is being talked about is a $310 million debt and a rather rapid timeline to get something done. The previous Governor said there was "no Santa Claus" riding to rescue the City but then released money to help them make a bond payment. This time things look different, and no one is going to eat the outstanding tab.