From a Crisis to a Catastrophe in Harrisburg

On Tuesday night Oct 11, 2011, Harrisburg City Council did what it should have done in January 2010. That is file for bankruptcy. But waiting a year and a half to make up their minds to file allowed the financial special interest to gather there forces to stop such a filing. They knew what the City would have to do in order to save itself from a complete break down in City services. From their point of view, paying them is more important than servicing the residents.

Harrisburg is made up of lower income earners. They are the least educated in financial legal matters. So they would be afraid of a Chapter 9 filing. A recent poll commissioned by ABC27 News based in Harrisburg, Pa.; of 1,000 city voters shows that only 13 percent of the city’s residents support the bankruptcy option. But with more money owed to bond holders, suppliers, contractors, and vendors than revenues coming into the treasury, the city for decades have been going down the path of insolvency. Opponents say that no one else is taking this step. Over 600 municipalities in the United States have taken this step since 1929. The country of Greece may have to file some sort of insolvency statement and reduce the amount of money given to bond holders. Other countries may follow suit.

The people in this country have not come to grips that they are in a deep recession if not a depression. Harrisburg is caught in an economic worldwide buzz saw that will force its government to take some sort of action to relieve its financial debt just like every other government around the world.

As a teenager, I heard the first words that told me that Harrisburg was in financial trouble back in the 1960s. This is when my uncle who owned a business told me that he would not seek a contract with the City because the City is a slow payer. This was under Republican Mayor William K. McBride (Jan 6, 1964 - Jan 1, 1968). I did not understand why the City did not pay its contractors on time but 40 years later, the message came home.

The city went through several mayors such as Mayor Albert H. Straub, Jan 1, 1968 - Jan 5, 1970 and Mayor Harold A. Swenson, Jan 5, 1970 - Jan 1, 1978. Under Mayor Swenson the problems with the incinerator started. Next came Mayor Paul E. Doutrich, Jr., Jan 3, 1978 - Jan 5, 1982. Then came the downtown building boom days of Mayor Stephen R. Reed, Jan 5, 1982 - Jan 4, 2010. He is the author of the remodeling of the City of Harrisburg but few people knew that the remodeling was done on credit. That credit was borrowed by a City population that decreased by 40% from the time Reed started in office to the time he left office. Then by mismanaging and interfering in the rebuilding of the incinerator to meet EPA standards and to make money for the City, he sealed the financial fate of Harrisburg.

Mayor Linda D. Thompson, Jan 4, 2010–Present took office not knowing the true financial situation of the City. Mayor Reed kept the City financial picture a secret for 27 years. Few people knew starting in 2001 that a secretary was appointed to take calls from ventures starting in September every year, telling them that their money would be coming.

Mayor Thompson in her inaugural speech said that she was ready to hit the ground running. But when it was time, she just hit the ground. Mayor Thompson and City Council should have filed for Chapter 9 when they found out that Act 47 would not solve the City’s financial problems. Instead, they hesitated and allowed their debtors to contact the state legislator and Republican Party for political help in getting their money. The commonwealth is planning a state takeover of the City.

Now the City will have to fight a state Supreme Court battle for the right to file Chapter 9 and they will have to fight to stay an independent state city.