Chapter 9 Update: …No Fury Like a (Mayor and Governor) Scorned

Harrisburg Mayor Linda Thompson, with backing from the state of Pennsylvania, is striking back at her own city council for their move to enter the capital city into municipal bankruptcy.
Last week, the NACM blog reported Harrisburg’s city council defied the wishes of the state and its own mayor by voting 4-3 to file for Chapter 9 bankruptcy. Supporters of doing so believe it gives the city leverage to renegotiate debt, largely tied to a massively unsuccessful trash incinerator project, and provides more of a fair option to local taxpayers that didn’t want to take a hit not proportional to that of investors.

However, Thompson and the state have now filed a motion in U.S. District Court to have the bankruptcy filing voided, arguing the city council, by statute, does not have the authority to authorize a bankruptcy filing without the documented support of the city mayor, and that it acted improperly in the filing. Thompson, following a failed bid by the state to stymie the bankruptcy, offered up a financial plan to avoid such a filing that included raised taxes and the selling of some city assets, namely parking structures and the aforementioned incinerator operation. Like the state’s plan, the city council rejected Thompson’s plan by a narrow margin.

A hearing on the Thompson/state motion is tentatively schedule for Nov. 23.

Brian Shappell, NACM staff writer