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Will the state have to soon bail out Harrisburg?
The Web site for the award-winning alternative weekly, the Philadelphia City Paper.
Will the state have to soon bail out Harrisburg?
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| Courtesy of justice.gov |
| The city owes a $68 million bill due by the end of the year. |
Add this to the list of things that may turn the state's recently passed budget upside down (right next to the millions of dollars Pennsylvania is expecting to get from the federal government in increased reimbursements for Medicaid): According to the Washington Post, the city of Harrisburg will have to pay up a $68 million debt before the end of the year. That's bigger than its entire annual budget.
Harrisburg's crisis has been precipitated by a malfunctioning municipal incinerator, whose ill-fated expansion was promoted as a potential moneymaker. But after seven years of cost overruns, construction delays, design problems, financings, refinancings and more refinancings, the city is on the hook. The $68 million bill is part of $288 million in outstanding debt related to the project.
The debacle is pushing the 150-year-old state capital toward default. The fiscal crisis has shaken the city, which over the past decade has spruced up its riverfront downtown and created tourist attractions in large part through low-cost financing afforded by municipal bond sales. In one notorious example, former mayor Stephen R. Reed spent nearly $8 million from the public authority that owns the incinerator to buy wagon wheels, rifles and other memorabilia for a Wild West museum that never opened. And like a homeowner who binged on cheap financing, this city is underwater financially.
The question is: If the city defaults, will the state bail out Harrisburg? Probably not, says the Washington Post, simply because Pennsylvania is so screwed itself. It's not impossible, though. The state, after all, bailed out Philly not so long ago.
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