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Harrisburg applies for Act 47 protection

By , - Last modified: February 15, 2011 at 11:12 AM

Harrisburg has applied for state protection under the commonwealth’s Act 47 program for distressed municipalities, Mayor Linda Thompson said today.

Thompson and Gov. Ed. Rendell made the announcement during a news conference in Harrisburg city hall.

Act 47 would provide the city with some state assistance in developing a recovery plan. It also would provide the city with the ability to levy a commuter tax, and it would give the city some control over the growth rate in public safety expenses.

The Department of Community and Economic Development secretary will decide whether Harrisburg is accepted into the program, Rendell said. The state will hold hearings on the matter in two weeks.

Banks would be more willing to issue the city deficit loans if Harrisburg is accepted into the program, Thompson said.

The Harrisburg Authority owes $288 million in debt due to a failed 2004 retrofit of its incinerator.

The City Council on Tuesday denied the mayor’s request to hire a financial adviser Thompson chose and that the state allocated money to pay. The commonwealth issued about $870,000 to hire Chicago-based Scott Balice Strategies.

Instead, the council on Tuesday approved issuing a request for proposals to hire a firm to investigate the ramifications of filing for Chapter 9 bankruptcy.

Thompson made the right decision by filing for Act 47 status, Rendell said. The stalemate between the council and the mayor has delayed progress toward a comprehensive debt recovery plan, he added.

Thompson had no other choice, Rendell said.

The Act 47 application, however, is an attempt to hire Scott Balice Strategies behind the council’s back, Councilman Brad Koplinski said. The council still will investigate filing for bankruptcy, he said.

Approval from the City Council wasn’t needed for the Act 47 application.

Over the summer, Rendell stepped in to help the city with its debt. If Harrisburg fails, every municipality is affected, he said.

This item was modified from its previous version to add details throughout, correct that Harrisburg has applied for the state's Act 47 protection.

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