The Latest On Harrisburg

Bankruptcy Judge Mary France has dismissed Harrisburg's Chapter 9 petition, ruling the city did not have the authority to file under state law.  See this post for my initial comments on the filing last month.  Mayor Linda Thompson and a minority of the city council have fought the filing all along.  I have not seen the ruling, but apparently it was based on two grounds: 1) Act 26 that the Pennsylvania legislature passed this year bars Harrisburg from filing, and 2) the authorizing resolution was invalid because it was not presented to the city solicitor first.


We'll see how this plays out.  First, I question whether Act 26 is actually constitutional, regardless of Judge France's ruling that it is.  Given that it targets Harrisburg alone among all the municipalities in Pennsylvania, it has to be vulnerable to an equal protection challenge.  Second, if the council can get around Act 26 and wants to refile, it can streamroll the city solicitor.  The law only requires that the resolution be presented to the city solicitor, not that he approve it.  "Here's this resolution we're going to pass.  Don't like it?  Pound sand!"  Believe me, I've been to that rodeo more than once.


If the decision stands, the mayor and the council minority are going to learn you should be careful what you wish for.  Once a receiver takes over, their authority is going to be reduced to the name plaques on their doors.  And maybe not even that.

They Were the First

We now have a state capitol in Chapter 9 bankruptcy. Harrisburg, PA has filed for protection. I guess wealth has become less common in the Commonwealth. The city fathers took one look at revenue projections and saw they would never cover bond payments. Translation: Local economic activity is not generating enough revenue to cover local infrastructure costs. This is a severe problem. And to divert ourselves from it, we can start speculating which municipalities will be next. Cities failing puts strains on counties; counties failing puts strains on states. And then of course there are schools, utilities, transportation districts, etc. And on top of that, what happens when the Chapter 9 plans start cutting masses of employees, and the ones still employed find their pay and benefits drastically cut? Suddenly those public sinecures aren't looking so secure.