Harried in Harrisburg

Harrisburg bankruptcy receiver William Lynch this week announced Harrisburg would miss $3.4 million worth of GO bond interest payments due tomorrow. The payments involve Series D bonds and Series F notes issued in 1997, both refundings, according to an official statement released at the time. They totaled $51.5 million. This would mark a second missed payment, the other, a $5.3 million payment, was due last March 15th. Harrisburg will, instead, use the funds to pay salaries. The missed payment comes as the city awaits the expiration of its state-imposed restriction barring filing for Chapter 9 federal bankruptcy protection on Nov. 30th. The city is overwhelmed with $320 million of debt, most of which is connected to its incinerator retrofit project, but also by intracity disputes, not to mention the different perspectives from the state with regard to priorities between local employees, local taxpayers, and bondholders—or, as City Council member Brad Koplinski stated: “While we never want to not pay our debts, it is vital that we pay the hard working employees of this city who maintain the health, safety and welfare of our citizens.” Meanwhile, Mr. Lynch, who is projecting a $12.6 million structural deficit, said last month that Harrisburg could run out of money by the end of September. The receiver’s financial recovery plan includes increasing the city’s earned-income tax to 2% to 1%, a plan to which the City Council has objected—and an issue the Commonwealth Court of Pennsylvania will revisit next month—albeit, as one person noted: “Increasing the property tax is like squeezing blood out of a rock…People don’t have the money. Harrisburg is poor and has been poor for a long time.”