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Harrisburg files for Chapter 9 bankruptcy

Oct. 12, 2011 at 8:00 PM   |   Comments

HARRISBURG, Pa., Oct. 12 (UPI) -- Harrisburg, Pennsylvania's capital city, has filed for Chapter 9 municipal bankruptcy -- a move the city's mayor called illegal.

Mark D. Schwartz, an attorney hired by the City Council, said in an e-mail he filed the bankruptcy petition Tuesday night with the U.S. Bankruptcy Court for the Middle District of Pennsylvania, The (Harrisburg) Patriot-News reported.

The council's 4-3 vote in favor of bankruptcy came as the state threatened to take over the city's finances and Harrisburg Mayor Linda Thompson pressed instead for her fiscal-recovery plan.

The move comes as the Pennsylvania state Senate is expected to vote on a measure when it returns from recess Monday that would allow state takeover of the city's finances. The House has already approved the measure and Pennsylvania Gov. Tom Corbett has said he would sign takeover legislation if it reached his office.

The city faces about $300 million in debt, much of it from a failed incinerator project, and its annual operating budget totals only about $60 million.

The mayor said at a news conference Wednesday she is working with lawyers to determine the legality of the council's action. Dauphin County, where Harrisburg is both the county seat and largest city, is considering filing a motion in federal bankruptcy court to dismiss the petition.

A lawyer for the county commissioners said municipalities need a state's consent to file for bankruptcy.

The plan the mayor is pushing calls for sale of the city's incinerator, which is burdened by $310 million in debt, and leasing its parking system. The county has had to cover payments a number of times on the incinerator.

Topics: Tom Corbett
© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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