The current bankruptcy drama in Harrisburg, Pennsylvania is just the third act of a long running effort to make the city something more than a corridor for those who commute into the city for work. Most of the current debt problems of Harrisburg stem from failed projects intended to revitalize the city and extremely bad business decisions.
The chart above shows the massive increase in Harrisburg’s population that occurred up to 1950 then starting falling steeply since mid-century. The city’s population was actually smaller in 2010 than it was in 1900. It’s just one of many American cities that has seen its vitality and population fade away.
Almost all the news coverage now is focused on the current players and their attempts to use the law to bend events towards their vision of the future. For example, the mayor, the county and the state are petitioning in bankruptcy court to halt the actions of the city council who filed for Chapter 9 bankruptcy. The bankruptcy judge will sort out these claims in an emergency court hearing on Monday. It’s high drama and makes for great journalism.
We should step back, though, and take a broader view of events and discern some important lessons for municipal governance. For example, current news reporting has focused on the $320 million of debt owed for the unprofitable incinerator plant. But the city has an additional $143 million dollars of debt, which they either issued or guaranteed. Harrisburg is a city of 49,000 with a majority of low income residents who had a median household income of $26,920 in 2010. The city is way over it’s head in debt with municipal debt per household of approximately $23,734. It’s hard to see how this can be serviced.
This debt, for the most part, was taken on by the former mayor, Stephen R. Reed, who served for 28 years and championed a whole slate of development projects from the incinerator upgrade to a Wild West museum. His efforts may have been to able kick start the city but he left it in debt hell. The local paper The Patriot News reported in 2009: