Harrisburg Files For Chapter 9 Muni Bankruptcy To Stop State Takeover


flickr / Clement.Meynier

Harrisburg, Pennsylvania’s capital city, filed for municipal bankruptcy today, ending months of bitter infighting just days before state lawmakers are scheduled to vote on a possible takeover of the city’s finances.The Wall Street Journal reports that Harrisburg successfully sought Chapter 9 protection this morning, after faxing in an invalid filing late last night. The city, which faces a $300 million debt from a botched trash incinerator renovation, is projected to run out of cash sometime this quarter.

The decision to file for Chapter 9 — a rare move for municipalities — is not unexpected, given Harrisburg’s chronic fiscal mismanagement. But it will come as a blow to state lawmakers, who have been desperately trying to prevent a bankruptcy. A bill that would allow the state to force the city to implement a financial rescue plan was scheduled for a vote in the State Senate sometime next week.

The Harrisburg city council has rejected two rescue plans, one backed by the state and the other proposed by the city’s controversial mayor, Linda Lengle. Lengle’s plan called for an 8% property tax increase and selling the city’s parking garage and doomed trash incinerator.

The Chapter 9 filing may not mean the end of the Harrisburg fiscal drama. Lengle, a polarising figure who has called on voters to pray and fast for the city’s financial health, is now looking into the legality of the council’s bankruptcy vote last night, a spokesman told Reuters.

DON’T MISS: Here’s What You Need To Know About Municipal Bankruptcy

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