Last year, muniland watched as the mayor, city council members and state legislature went through a tortuous period of fighting over filing municipal bankruptcy for Harrisburg, Pennsylvania. The city council filed a bankruptcy petition, but the mayor objected. Then the legislature passed a law that denied Harrisburg the right to file until November 30, 2012. The bankruptcy judge threw out the bankruptcy petition and the governor appointed a receiver to take control of the city’s finances.
The first-state appointed receiver, the seasoned bond attorney David Unkovic, worked for about six months and then resigned from his position because he felt he was being obstructed in his efforts. He testified to the state senate about the substantial problems with the city’s debt issuance. Roxbury News captured his testimony about the cronyism and his recommendations to legislators:
The delay that occurred last year gave Unkovic enough time to review the bond offerings that pushed the city into insolvency. Unkovic said in his testimony:
You need a criminal prosecutor to get all the emails [of the bond deals]. There was certainly a disdain for the law. These deals stunk like a kettle of rotten fish.
Joseph N. DiStefano of the Philadelphia Inquirer wrote a piece about Unkovic’s recommendations for changing state laws to protect taxpayers, including banning swaps, when municipal debt is issued: