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Pa. Gov. Corbett moves toward Harrisburg takeover
Gov. Corbett moves toward unprecedented state takeover of financially troubled Pa. capital
By The Associated Press

HARRISBURG, Pa. (AP) ' Gov. Tom Corbett is taking steps toward assuming control of the finances in Pennsylvania's troubled capital under a state law freshly signed on Thursday aimed at giving him unprecedented power to force Harrisburg to pay off its staggering debt.

The steps by the Republican governor are, for now, running alongside a City Council petition ' filed in defiance of Corbett ' seeking federal bankruptcy protection in hopes of forcing creditors to forgive a substantial portion of Harrisburg's debt.

Corbett expects as early as next week to declare Harrisburg to be in a state of fiscal emergency, which ultimately could result in the appointment of a receiver who would have the power to sell city assets, approve contracts and file for federal bankruptcy protection, but not raise taxes.

Corbett's office is finalizing the paperwork and, once it is finished, he will sign it, spokeswoman Kelli Roberts said Thursday.

Corbett said he remains a strong proponent of allowing municipal government to solve its own financial problems, but that the state must act to preserve public safety if local officials fail to act.

"I remain a strong proponent for municipal governments tackling their own problems and coming together to develop a fiscal recovery plan when necessary," Corbett said in a statement Thursday. "But when that fails to happen, the state has to take action to ensure public safety."

Harrisburg Mayor Linda Thompson, who has sought Corbett's help in her stalemate with the City Council, said Thursday she will obey the law and hopes to strike an agreement with the City Council on a financial strategy before the full breadth of a takeover goes into effect.

Once Corbett signs the declaration, he can order Harrisburg to obey financial plans drawn up by his appointees, the most aggressive intervention yet by the state government into the affairs of a Pennsylvania city in a state with a strong of tradition of local control.

He can direct his secretary of community and economic development to develop an emergency action plan within 10 days to ensure the continuation of vital services, including payroll and payments for pension and debt obligations.

If 30 days pass without an agreement between the city and the state on a financial recovery plan, the state Commonwealth Court could authorize the appointment of a receiver named by the governor.

Opponents of the bill suggest that it violates the state constitution's rules over the delegation of power, not to mention disrespecting longstanding principles of democracy, autonomy and sovereignty by stepping over locally elected officials.

The bill is a response to an unprecedented rejection by the City Council of a financial recovery plan presented to it under Pennsylvania's Municipalities Financial Recovery Act, often referred to as Act 47.

The cash-strapped city's inability to make installment payments on an approximately $300 million debt largely tied to a trash incinerator drove it into the Act 47 program, which is designed to help financially distressed cities recover without filing for federal bankruptcy protection.

But City Council voted 4-3 against a plan drawn up by state-appointed consultants and supported by Mayor Thompson. The plan, they said, would heap a disproportionate share of financial pain onto Harrisburg residents, while largely giving a pass to Dauphin County, which has backed part of the debt, and the bond insurer, Assured Guaranty Municipal Corp.

The likelihood of the takeover bill's passage by the Republican-controlled Legislature hastened a move by the divided City Council to file a Chapter 9 bankruptcy petition in federal court last week.

Judge Mary France has set a Nov. 23 court date for oral arguments on legal questions surrounding the bankruptcy petition, which could help determine whether the city's filing will be allowed to stay in court.

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