HARRISBURG, PA - On Oct. 24, Pennsylvania Governor Tom Corbett declared the City of Harrisburg to be in a state of fiscal emergency, following the City Council's bankruptcy filing on Oct. 11.

Following the governor's declaration of fiscal emergency, Mayor Linda Thompson announced she would move forward with the Act 47 financial recovery process. "Hopefully we can pull together for the good of our citizens and stop the so-called takeover of our city's financial recovery through this amendment," she stated in a release.

The Act 47 recovery plan includes a consolidation of the City fleet and facility maintenance and the hiring of a manager to manage the new division. A spokesperson for the City told GF that fleet was previously part of two separate departments: Public Works and Parks & Recreation. The City is recruiting for the manager position and hopes to have it filled by Jan. 1, 2012, he said.

In Fiscal Emergency

The governor stated in the declaration of fiscal emergency: "City council's failure to enact a recovery plan in order to deal with the City's distressed finances has led me to declare a fiscal emergency. This action ensures that vital services will continue and public safety will be protected."

The governor directed the secretary of the Department of Community and Economic Development (DCED) to develop an emergency action plan for the City to coordinate vital services, including police, firefighting, water and wastewater, trash collection, payroll, pension, and debt payments. Harrisburg was given 30 days to develop or agree to a financial recovery plan acceptable to the DCED secretary. If it doesn't, the State may appoint a receiver to implement a fiscal recovery plan.

Unauthorized Bankruptcy Filing

Although the Chapter 9 filing by City Council stated the City satisfied eligibility criteria for the filing, the Commonwealth of Pennsylvania on Oct. 14 filed an objection, citing "the existence of a state statue expressly forbidding it."

Mayor Thompson also opposed the bankruptcy filing, stating it was in violation of a city ordinance and "unauthorized." She said Oct. 17 that the filing would have no effect on the City business, including relationships with all vendors and creditors, and that no payment schedules would be affected.

A judge is expected to decide on the legality of the filing on Nov. 23.

The Altoona Mirror reported the City of Altoona, Pa., is looking into the State's Act 47 distressed municipalities program to avoid bankruptcy.

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