Harrisburg tense, on edge of bankruptcy

HARRISBURG, Pa., Sept. 2 (UPI) -- Tension is mounting in Harrisburg, Pa., concerning the city's potential fall into bankruptcy, observers said.

Dauphin County, which is a guarantor of Harrisburg bonds, has given permission to a bond trustee, TD Bank, to sue the city over $35 million it owes on bond payments for an incinerator project, the Central Pennsylvania Business Journal reported Thursday.

The city has balked at making payments, missing one deadline on Aug. 15, and County Commission Chairman Jeff Haste called city officials in a note to Councilman Brad Koplinski, "a bunch of cowards."

"This is nothing but a shell game and lip-syncing," the note said.

A municipal financing expert, Matt Fabian, managing director of Municipal Market Advisors said, "It seems that a municipal bankruptcy filing is almost a foregone conclusion" for Harrisburg, the state capital.

The city's mayor, Linda Thompson, "still believes it (bankruptcy) should be the last option," said mayoral spokesman Chuck Ardo, The Washington Post reported.

However, Ardo said "The city's ability to fill the debt hole (on the incinerator project) are between nil and none."

The city has a budget deficit of $9 million, which is separate from the $288 million total debt associated with the incinerator, the newspaper said.