After months of posturing and politicking between Harrisburg leaders, the state will step in and appoint a receiver to take control of the debt-ridden capital city's fiscal future.
Discussions broke down Monday — the final day of a 20-day timeline for city officials to iron out an amended recovery plan.
Under a recently amended Act 47 law, any third-class distressed city that fails to implement a recovery plan under the state's Act 47 program will be given 20 days following the governor's declaration of a fiscal emergency to complete a revised plan and submit it to the secretary of the Department of Community and Economic Development.
The latest failed attempt effectively gives DCED Secretary Alan Walker, at the direction of Gov. Tom Corbett, the power to petition the Commonwealth Court to appoint a receiver to make financial decisions.
That petition is expected to be filed next week, said Kelli Roberts, a Corbett spokeswoman. The governor is considering a handful of individuals for the post, she said, declining to reveal who is being considered or what type of qualifications Corbett is looking for as he makes a final decision.
The debt problem, which includes more than $300 million of incinerator debt, has been known for more than four years. Former Mayor Stephen R. Reed was talking about leasing city garages to generate needed revenue.
It's time problems get solved, said Dave Black, president and CEO of the Harrisburg Regional Chamber and Capital Region Economic Development Corp.
"It brings stability to the region," Black said about the receivership process. "This will send a positive message."
The lack of a plan from city officials was not a surprise to the business community, he said.
"That situation can't go on," he said, noting repeated plan rejections that included a state-sponsored team's blueprint and a similar version crafted by Mayor Linda Thompson. "There has been time and ample opportunity."
The City Council members who rejected the proposed plans and filed for Chapter 9 municipal bankruptcy protection — Susan Brown-Wilson, Brad Koplinski, Eugenia Smith and Wanda Williams — have expressed concern a state takeover could lead to a full-scale sale of city assets.
City leaders have agreed the incinerator should be sold and the parking garages leased.
"Privatization is not a bad word," said Black, arguing that other asset deals should at least be explored.
He cited the sewer and water systems as one example.
"No one has gathered the data, so they don't know whether it makes sense," Black said. "I am not saying sell everything off. In the long run, is it better to get out of those businesses because of the long-term maintenance costs?"
Once the receivership petition is filed, the court has 15 days to hold a hearing and 60 days to make an appointment. The receiver would have 30 days to develop a recovery plan for Harrisburg, according to the law.
Meanwhile, Judge Mary France will hear arguments Nov. 23 in Harrisburg on the legality of the city's bankruptcy petition.