It’s time to look pragmatically at Harrisburg’s flawed state bailout, and pull the plug on the pieces that aren’t working, like the insider parking deal.
The City of Harrisburg is insolvent. In fact, its yearly operating budget is millions of dollars in the red.
As part of the smoke and mirrors of the Corbett Administration’s state-imposed bailout of 2013, the Commonwealth of Pennsylvania is supposed to give Harrisburg at least $10 million a year in subsidies for years ahead to keep the city afloat.
The city’s budget is only $59 million, so $10 million in hidden subsidies is quite a prop.
These subsidies includes $5 million a year for fire and “public safety protection,” and another $5 million that Corbett pledged to pay for state employee parking spaces, to keep the unpopular and financially questionable parking deal solvent.
Trouble is, none of those state funds are in any way guaranteed, and must be approved yearly by the legislature. Moreover, as longtime Harrisburgers know, it has been a tug of war going back to the 1960s to get the state to pay for fire protection services. The state for decades has threatened to cut the funds, or not pay at all.
Gov. Corbett himself threatened to line-item veto the $5 million in parking funds in July 2014, saying the legislature should pick up the tab.
All this is only going to get worse.
It has been generally assumed for months that the only hope Dem. Mayor Eric Papenfuse has to keep the city afloat is to go hat in hand to incoming Dem. Gov. Tom Wolf and ask for more money from the state.
(The current city administration, I should add, is not doing a very good job of informing its residents of the finances of the city, cash flow, cash-on-hand, obligations, and so on. City finances, incredibly after all this mess, continue to be opaque. Your car has a gauge on its dashboard to let you know when you’re about to run out of gas; some, like Nevin Mindlin, have wisely suggested the city’s website feature an easily understandable ‘finance dashboard’ to let residents know the state of finances.)
The point is, a great bit of the city’s future and financial stability now rests in the hands of state government.
Trouble is, as we know, incoming Gov. Wolf now faces a state budget deficit approaching $2 billion. If I had to bet, it would be that the Republican-controlled legislature is going to be more than willing to see Harrisburg’s finances suffer to embarrass Democrats Gov. Wolf and Mayor Papenfuse.
So, there are several possible outcomes we can reasonably anticipate. What the unenlightened mayor most likely wants to do is go hat and hand to the governor and ask for as much money as needed to bail out the city, year after year (about $10 million), while the citizens continue to be strangled by the unworkable and predatory Standard Parking deal, and downtown businesses as a result wither and die.
As you can see, the governor has a big role to play (though his hands may be tied by the legislature). If Wolf is smart, he will not simply propose writing a check to Mayor Papenfuse. Gov.Wolf instead should pragmatically look at this onerous and failing insider bailout, and throw out the parts that are not working, such as the Standard Parking deal.
The bailout, after all, was put together for and by the city’s bond dealers, who donated heavily to the Corbett Administration and its friends.
Tom Wolf should ask himself to what extent he wants to wade into this Big Muddy, and make the mess his own.
Sound public policy should make a city livable. The Harrisburg bailout, on the other hand, is killing the city, at the expense of subsidizing errant bond dealers, who should not be rewarded for their many mistakes, past and present.
If this financial calamity drags on, and becomes more of a train wreck than it already is, with the legislature refusing money to politically embarrass Gov. Wolf, then insolvency inevitably will renew talk of bankruptcy.
The biggest selling point in favor of bankruptcy is the favorable and expedited treatment recently received by Detroit in bankruptcy court. The Corbett administration, our local newspaper, and the current mayor attempted to scare townfolk away from the bankruptcy option by saying it would drag out for years, etc.
They pushed through this debtor-favorable bailout only months before Detroit’s court filing, without bothering to wait and see what would happen with the Motor City. At the time, there was very little precedent / case law to fall back on. Now there’s much more.
Former State Sen. Jeff Piccola several years back wrote legislation forbidding Harrisburg from filing for bankruptcy. The prohibition has now lapsed. And Piccola has been retired, after it was learned he was bilking consumers in a collections scheme.
In the meantime, to keep pressure on, concerned citizens should NOT park in Harrisburg, and continue to pressure Gov. Wolf to undo some of this insider nonsense from the Corbett Administration.
Photo by wertz·