2010 Mid-Term Election Winning Gubernatorial Candidate to Decide Pennsylvania's Financial Future

In the midst of the mid-term election frenzy, the story of Harrisburg has gotten lost in the dust. Harrisburg, the capital of Pennsylvania, is on the verge of bankruptcy, as the titans battle it out for control. This is, if nothing else, an election of extremes and the political battle is verging on becoming a bloodless civil war for control of Washington. The problem is that if nothing happens soon and Harrisburg goes bankrupt, all of Pennsylvania will suffer-this includes Philadelphia.

Financial Problems
Harrisburg's problems are purely debt related. The crisis stems in part from the $288 million in debt owed because of a failed incinerator project. The city was unable to make a $1.2 million debt payment which was due on Monday, November 1 2010; a payment insured by Assured Guaranty and has been since 2002. The announcement that the entire loan amount is coming due was made on October 29 2010. $35 million in other debt is also coming due on December 15 2010 and unless the situation changes, neither Harrisburg or the guarantor of the debt will be able to make the payment.. Current talks are studying whether the city can restructure and refinance the debt.

Harrisburg is essentially scrambling for its fiscal life and the problems extend past the domain of Harrisburg's Mayor Linda Thompson. Pennsylvania itself is facing a pension crisis with an estimated $25 billion in unfunded liabilities and no clear plan in place to address the issue. This further weakens Harrisburg's dilemma as the state is financially stressed as well and less able to shore up the city's collapsing financial structure.

A Possible Solution

Department of Community and Economic Development officials agree with the City Council that Harrisburg should apply for Chapter 9 bankruptcy pending its acceptance into Pennsylvania's program, Act 47 for distressed cities. However, this is the only thing anyone is doing to save the city.

DCED officials are adamant in their refusal to allow Scott Balice's hiring, whose expertise in selling public assets would help alleviate the city's problems; he would consult on the city's debt planning. This is contrary to the wishes of Mayor Thompson and Governor Rendell. Unfortunately, the legacy Rendell is leaving behind to the winning candidate of November 2 2010 mid-term elections, either Dan Onorato or Tom Corbett, is already set in stone and spilling over to other cities.

Revolt this close to the election is clearly political and while The Balice Firm is the favored choice of the current Democratic state administration, clearly the struggle for the debt control solution is responding to the growing Republican tide. I fear that regardless of how the election swings at the state level, Harrisburg's troubles are only beginning and the candidate elected November 2 2010 will no doubt have trouble cleaning up Harrisburg's act and stopping the trouble from spilling to the state level.

What the Future Brings
Philadelphia can expect the loss of state programs so Harrisburg can pay its debts. Additionally, when-not if, but when this happens, Philadelphians can expect the loss of jobs and overall city debt to increase, as can other big Pennsylvanian cities. Why? Because when loss spills over into the state level, everyone suffers. Harrisburg is Pennsylvania's capital city and its forgotten about finances and problems will leave a legacy of debt that Philadelphia and Pennsylvania cannot handle-we have out own problems.

Now, the Governor-to-be must clean up Harrisburg's act before the problem gets any worse and affects the state. Quite a disturbing example of how desperate and damaging the fight for control is, don't you think? The Gubernatorial candidates are state level and must stop Harrisburg's debt ridden legacy from affecting the rest of us.

Fred Redding, "DCED Wants Best Solution for City of Harrisburg," PennLive