page_title: Harrisburg, Pennsylvania
section_title: 21st century: fiscal difficulties and receivership
hierarchical_section_title: Harrisburg, Pennsylvania / History / 21st century: fiscal difficulties and receivership
caption_attribution_description: English: The Philadelphia and Reading Railroad Bridge crossing the Susquehanna River at Harrisburg, Pennsylvania, USA, as seen from the John Harris Bridge (Interstate 83).
context_page_description: Harrisburg is the capital city of the Commonwealth of Pennsylvania in the United States, and the county seat of Dauphin County. With a population of 49,271, it is the 13th largest city in the Commonwealth. According to 2018 estimates of the Census Bureau, the population is 51.8% Black or African American, 22.6% white, 21.8% Latino, 5.4% Asian, and 0.4% Native American while 3.9% identify as two or more races. It lies on the east bank of the Susquehanna River, 107 miles west of Philadelphia. Harrisburg is the anchor of the Harrisburg metropolitan area, which had a 2019 estimated population of 577,941, making it the fourth most populous metropolitan area in Pennsylvania and 96th most populous in the United States. It is the second-largest city in the multi-polar region known as the Lower Susquehanna Valley, comprising the Harrisburg, Lancaster and York metropolitan areas.
  Harrisburg played a notable role in American history during the Westward Migration, the American Civil War and the Industrial Revolution.
context_section_description: During the nearly 30-year tenure of former Mayor Stephen Reed from 1981 to 2009, city officials ignored legal restraints on the use of bond proceeds, as Reed spent the money pursuing interests including collecting Civil War and Wild West memorabilia—some of which was found in Reed's home after his arrest on corruption charges. Infrastructure was left unrepaired, and the heart of the city's financial woes was a trash-to-electricity plant, the Harrisburg incinerator, which was supposed to generate income but instead, because of increased borrowing, incurred a debt of $320 million.
  Missing audits and convoluted transactions, including swap agreements, make it difficult to state how much debt the city owes. Some estimates put total debt over $1.5 billion, which would mean that every resident would owe $30,285.  These numbers do not reflect the school system deficit, the school district's $437 million long-term debt, nor unfunded pension and healthcare obligations.
  Harrisburg was the first municipality ever in the history of the U.S. Securities and Exchange Commission to be charged with securities fraud, for misleading statements about its financial health. The city agreed to a plea bargain to settle the case.
  In October 2011, Harrisburg filed for Chapter 9 bankruptcy when four members of the seven-member City Council voted to file a bankruptcy petition in order to prevent the Commonwealth of Pennsylvania from taking over the city's finances. Bankruptcy Judge Mary France dismissed the petition on the grounds that the City Council majority had filed it over the objection of Mayor Linda Thompson, reasoning that the filing not only required the mayor's approval but had circumvented state laws concerning financially distressed cities.
  Instead, a state-appointed receiver took charge of the city's finances.  Governor Tom Corbett appointed bond attorney David Unkovic as the city's receiver, but Unkovic resigned after only four months. Unkovic blamed disdain for legal restraints on contracts and debt for creating Harrisburg's intractable financial problem and said the corrupt influence of creditors and political cronies prevented fixing it.
  As creditors began to file lawsuits to seize and sell off city assets, a new receiver, William B. Lynch, was appointed. The City Council opposed the new receiver's plans for tax increases and advocated a stay of the creditor lawsuits with a bankruptcy filing, while Mayor Thompson continued to oppose bankruptcy. State legislators crafted a moratorium to prevent Harrisburg from declaring bankruptcy, and after the moratorium expired, the law stripped the city government of the authority to file for bankruptcy and conferred it on the state receiver.
  After two years of negotiations, in August 2013 Receiver Lynch revealed his comprehensive voluntary plan for resolving Harrisburg's fiscal problems. The complex plan calls for creditors to write down or postpone some debt.  To pay the remainder, Harrisburg will sell the troubled incinerator, lease for forty years its parking garages, and go further into debt by issuing new bonds. Receiver Lynch has also called for setting up nonprofit investment corporations to oversee infrastructure improvement (repairing the city's crumbling roads and water and sewer lines), pensions, and economic development. These are intended to allow nonprofit fundraising and to reduce the likelihood of mismanagement by the dysfunctional city government.
  Harrisburg's City Council and the state Commonwealth Court approved the plan, and it is in the process of being implemented.
caption: Downtown Harrisburg, Pennsylvania panorama, as seen from the John Harris Bridge (2000)
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