2011-09-08 / Local & State

Recovery Plan For Troubled Pa. Capital Rejected

By Marc Levy

HARRISBURG, Pa. (AP) – Council members in Pennsylvania’s deeply indebted capital rejected another recovery plan Wednesday night, risking a backlash by Gov. Tom Corbett as the city creeps closer to running short of money and being unable to meet payroll and a general obligation bond payment.

The 4-3 vote by Harrisburg City Council members was identical to their vote six weeks ago against a recovery plan proposed by a state-ap- pointed task force. This time, the vote was against a plan drafted by Democratic Mayor Linda Thompson that critics said guaranteed years of increasing property taxes and water and sewer rates to make its flawed math add up, while the county, the state and lenders shared little of the burden.

“This is making sure that Wall Street gets paid and Main Street gets the shaft,’’ council member Brad Koplinski said.

The vote sends Harrisburg further into uncharted territory after it entered a state program designed to help financially distressed municipalities and ward off bankruptcy. Corbett, a Republican, had supported the recovery plans, and he has warned that he would sign a bill, if it passes the state Legislature, to force it on Harrisburg.

Both recovery plans relied on two key elements: selling the city’s trash incinerator to the Lancaster County Solid Waste Management Authority and selling or leasing longterm control of city parking garages, meters and lots in exchange for a sizable upfront payment. In theory, the proceeds from the two deals would help pay down most of the approximately $300 million in debt tied to the incinerator.

Speaking to reporters later, Thompson said she was disappointed with the vote, and she warned that the next step was up to the Corbett administration, which has the power to cut off Harrisburg from state aid.

Thompson also defended her plan, saying that the county and the bond insurer had made tens of millions of dollars in concessions.

Perhaps more pressing is the cash-strapped city’s need to come up with millions of dollars so it can meet more than $3 million in payroll and a $3.3 million general obligation bond payment in September.

Thompson is asking the Corbett administration to accelerate state aid due later in the year so Harrisburg can make the payments, while her administration also is trying to broker a deal for $7.5 million from the city’s parking authority. The parking authority must borrow that money, and Thompson suggested that a bank would be more likely to loan the money if the City Council had approved her plan.

“With (the) council’s action tonight, it doesn’t put me in a position of strength to go into those rooms and make those phone calls, and say, `Hey, you know, this is what I got for you,’’’ Thompson said. “I have nothing now. I don’t have answers to how we’re going to get that cash flow in here.’’

Messages left for Corbett spokesmen Wednesday night were not immediately returned. Earlier Wednesday, a spokesman for the Corbett administration would not speculate on how it would respond to a rejection of Thompson’s plan.

Council member Patty Kim urged approval of the plan, saying the city would have to accept something similar sooner or later, whether the Republican-controlled state Legislature and Corbett force the plan on the city or the city seeks federal bankruptcy protection.

Legislation pending in the state House would create a management board to oversee Harrisburg’s finances and carry out a state recovery plan, and Corbett has said he would sign it. However, a spokesman for the state’s House Republican majority said Tuesday that it has no plans to advance the bill and has not discussed it with Corbett.

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