2011-07-07 / Local & State

Bill To Stop Harrisburg Bankruptcy Sent To Pa. Governor

By Marc Levy
ASSOCIATED PRESS

HARRISBURG, Pa. (AP) – A bill that would punish Pennsylvania’s financially troubled capital and dozens of other small- to medium sized cities for seeking federal bankruptcy protection received approval from the state Legislature on Thursday and was sent to the desk of Gov. Tom Corbett.

Corbett, a Republican, was expected to sign the measure, contained in a wider, budget-related bill that guides a range of state spending. The Republican-controlled Senate and House both approved the measure in a flurry of activity Thursday as lawmakers rushed to wrap up pressing business and leave Harrisburg for their traditional two-month summer break from the capital.

The bankruptcy provision was not debated on the floor of either chamber before it passed.

Under it, any of more than 50 cities within a certain population range – third-class cities that include Allentown, Erie, Reading, Bethlehem, Lancaster and Wilkes- Barre – that is deemed by the state to be financially distressed would lose all state aid if it files for bankruptcy protection before July 1, 2012.

The provision was designed to target Harrisburg, where officials have raised the possibility of filing for bankruptcy as a way to deal with massive debts related to its trash incinerator. It is also facing several lawsuits over debt payments that it did not make.

“If we have one of these big lawsuits come down ... taking that money directly out of our coffers, bankruptcy would have to somehow have to be discussed with the state to protect our assets,’’ said city councilman Brad Koplinski.

Mayor Linda Thompson doesn’t support a bankruptcy filing in the city’s current situation, but she also opposes any action by the Legislature to narrow the options of elected officials in third-class cities, spokesman Robert Philbin said Thursday.

The area’s state senator, Jeffrey Piccola, R-Dauphin, has complained that Harrisburg officials are improperly using the threat of bankruptcy as leverage against lenders. The city can address its problems through a law called Act 47 that is designed to guide financially distressed municipalities back to stability with the help of a state-appointed task force, Piccola has said.

Piccola did not write the provision but supported it, a spokeswoman said Thursday.

The bill was an alternative to a broader bill written by Piccola that opponents saw as far more onerous.

Piccola’s bill would bar a thirdclass city that refuses to adopt a state task force’s plan from seeking bankruptcy protection, and it would create a management board with broad powers to oversee the municipality.

That bill won passage in the Senate over Democratic opposition and remains pending in the House.

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