Bankruptcy for Harrisburg finally?
The fiscal troubles plaguing Harrisburg, Pennsylvania have been well telegraphed in muniland. Reuters detailed the problems earlier this month:
Pennsylvania’s state capital, a city of 50,000 about 100 miles west of Philadelphia, has been flirting with bankruptcy as it struggles to pay off $300 million in debt incurred through a financing scheme used to fund a revamp of its trash-burning plant.
In July, the city council rejected a rescue plan put forward by a state-appointed advisor that called on the city to sell the incinerator, renegotiate labor deals, cut jobs, and sell or lease its parking garage.
Bloomberg reports today that Harrisburg is likely to miss a municipal bond payment on September 15. When a bond issuer misses a payment, rating agencies give them 30 days to cure the missed payment; if they are unable to do so, the rater declares them in default. Municipalities are not required to file a Chapter 9 bankruptcy because of this, but generally that is the sequence of events. So if Harrisburg misses the bond payment, it is likely they are headeded to the federal bankruptcy courthouse. Bloomberg reports:
Harrisburg may miss $3.3 million in general-obligation bond payments due Sept. 15, said Robert Philbin, a spokesman for Mayor Linda Thompson, in a phone call today.