2010-02-25 / Local & State

Rendell: Pa. Can’t Pay Down Harrisburg’s Huge Debt

HARRISBURG, Pa. (AP) – The state of Pennsylvania cannot help pay off the huge debt weighting down its capital city, although Gov. Ed Rendell says the mayor has a “workable’’ plan to address the problem.

Rendell met Wednesday with Mayor Linda Thompson to go over details of her plan, which, in part, involves selling city assets.

“From the state’s standpoint, I believe this plan is a workable one,’’ Rendell told the Patriot- News for a story in Thursday’s editions.

Selling assets, he said, is painful, but will show bondholders that the city is serious about trying to pay back as much as it can.

“And it will make it easier for the city to renegotiate the outstanding loans,’’ Rendell said.

The other part of Thompson’s plan involves securing higher trash-dumping fees paid by Dauphin County.

Harrisburg has guaranteed the $288 million debt on the city’s trash incinerator. That amount is more than four times as much as the city’s annual budget.

Neither the city nor the Harrisburg Authority, which operates the incinerator, have the cash to meet $68 million in debt payments due this year.

The city of fewer than 50,000 is carrying the state’s highest per capita debt at more than $9,000 per person, according to state records. That is about three times as much as its second most-indebted city, Philadelphia.

Rendell said the financial help Pennsylvania could offer Harrisburg is meager compared to what Harrisburg needs.

“So, there is no Santa Claus riding into the aid of the city,’’ Rendell said.

However, consultants to the city, Management Partners, have expressed doubt as to whether the city can sell its assets quickly enough to meet payments.

Harrisburg City Controller Dan Miller said he opposes the sale of assets – such as the city’s parking lots, metered spaces and garages – that can provide revenue to sustain the annual budget. Instead, the city should seek Chapter 9 bankruptcy protection, he said.

Thompson opposes that route, saying a judge could order the city to raise property taxes and sell city assets.

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