Harrisburg officials: Dauphin County must share in pain of debt recovery

Eric Veronikis | By Eric Veronikis | The Patriot-News
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on June 14, 2011 at 9:43 PM, updated June 15, 2011 at 7:35 AM

Harrisburg's Act 47 fiscal-recovery plan from the state is useless if Dauphin County doesn't drop its lawsuits against the city and agree to concessions, some City Council members said Tuesday night. 

One suit seeks reimbursement for a $35 million bond payment the county made on the incinerator debt in December. The other seeks repayment for smaller payments the county made on the remaining $275 million in debt generated by a failed retrofit of the city's trash burner. 

 Those type of demands have to go away if the city is to get back on sound financial footing, council President Gloria Martin-Roberts said.

 Every entity that calls itself a stakeholder of the debt has to come together on a fiscal recovery plan, including bond insurance company Assured Guaranty Municipal Corp., Martin-Roberts said. AGM has made debt payments for the city, too, and it also is suing Harrisburg. 

"It could be a dealbreaker" if the county and AGM do not share the pain called for in the plan, Martin-Roberts said. 

The Dauphin County commissioners did not return repeated phone calls seeking comments. The commissioners are to meet with the Act 47 team at 1 p.m. today to ask questions and comment on the plan, said Amy Richards, the commissioners' press secretary. 

 Mayor Linda Thompson said the commissioners have indicated they will drop the lawsuits to help move the plan forward. The commissioners are comfortable with the components of the plan, Thompson said. 

 City Councilman Brad Koplinski said depending on other stakeholders for help is risky. Act 47 can direct the city to follow the team's recommendations because Harrisburg filed for distressed status, but the other parties involved didn't, and that means the state cannot force them to do anything, Koplinski said. 

 The plan encourages the county to give Harrisburg $2 million a year in gambling revenue to help offset the loss of revenue from the sale of Harrisburg's assets. 

 If Harrisburg depends on $2 million annually in county gaming revenue, it could be left hanging, he said. "That is a huge leap of faith that we are taking," Koplinski said. 

 Koplinski also said the county and AGM have to drop their lawsuits in order for the plan to work. 

 The Act 47 plan's major components include layoffs across city departments, the sale or lease of Harrisburg's parking garages, the sale of the incinerator to the Lancaster County Waste Management Authority, wage freezes and a 0.8-mill city property tax hike equal to a $50 increase for the average property owner. 

The council will discuss the plan with the Act 47 team at 6 p.m. June 21 in the council's chambers. The team has scheduled a public hearing on the plan for 5:30 p.m. June 28 at Harrisburg High School. 

 The plan can be adjusted following the hearing, but the council and Thompson have 25 days from then to accept or reject the plan. 

 Should the city not agree with other stakeholders and adopt a plan, the state could withhold grants and other money. Martin-Roberts said she is hopeful that stakeholders will work together. 

"[The county] has to [accept concessions]. They cannot deny the fact the city is located in Dauphin County, and they can't ignore us as an entity," Martin-Roberts said.