HARRISBURG, Pa. (AP) — Gov. Tom Corbett signed a new law Thursday giving him unprecedented power to force Pennsylvania’s capital into a state-sanctioned financial recovery plan.
The bill opens the door to what observers say is the most aggressive intervention by the state government into the affairs of a Pennsylvania municipality.
It lets Corbett order a financially troubled city to obey financial plans drawn up by his appointees, including a receiver who would have the power to sell city assets, approve contracts and file for federal bankruptcy protection, but not raise taxes.
The Republican signed the legislation less than a day after the House voted – without debate and by a large margin – to approve the plan to deal with Harrisburg’s staggering debt brought on by $300 million in debt largely tied to the city’s trash incinerator.
The debt dwarfs Harrisburg’s $55 million annual operating budget, while the incinerator does not generate enough of a profit to pay off the debt.
The likelihood of the bill’s passage by the Republican-controlled Legislature hastened a move by a divided Harrisburg City Council to file a Chapter 9 bankruptcy petition in federal court in recent days. 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.
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. “But when that fails to happen, the state has to take action to ensure public safety.”
He said the new law would help enforce the Act 47 program, which is designed to help financially distressed cities recover without filing for federal bankruptcy protection.
“The bill signed into law today will help to enforce Act 47 when municipalities fail to adopt a fiscal recovery plan, making it clear that if there is a failure to act, the state will intervene,” Corbett added. “This legislation does not change the overall goal, and that goal is for distressed third-class cities to adopt and implement a fiscal recovery plan that will lead to solvency.”
