Pennsylvania Bars Harrisburg Bankruptcy

By: - July 3, 2012 12:00 am

The financially strapped city of Harrisburg, Pennsylvania, will have to wait until at least November 30 before it can file for bankruptcy — that’s the decision from the state legislature and Governor Tom Corbett.

Harrisburg is currently under receivership from the state and faces more than $300 million in debt largely as a result of a ruinous trash incinerator project. Some city officials want to deal with the problem by declaring bankruptcy. The 2012-13 state budget signed by Corbett on Saturday makes that impossible for at least the next five months.

The delay was an idea spawned by the legislature, but Corbett did not disagree with it, says Kelly Roberts, a spokesperson for the governor. The ban was met with frustration from the city council and the state-appointed receiver, retired Air Force General William Lynch.

“Lynch has said he wants the bankruptcy option,” said city councilman Brad Koplinski in an interview with Reuters. “Why would Governor Corbett send his general into combat to negotiate with our city’s creditors without the heaviest artillery? We are trading in our tanks for pea shooters and our nuclear missiles for slingshots.”

Adding to the frustration over the delay, the receivership itself is still under fire from a faction of angry city officials. Five city council members, Controller Dan Miller and Treasurer John Campbell filed a lawsuit in federal court last week challenging the state takeover and seeking to stop the work of the receiver. They argue that because the legislature handed the power to choose and appoint the receiver to Governor Corbett, the move is a violation of due process.

In the nation as a whole, 262 municipalities have filed for bankruptcy since 1980.

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