Dear Jim,
This is no big surprise but it is a milestone in the descent of municipalities.
CIGA Rusty Bayonet
Harrisburg bankruptcy sets up fight with state
By Dave Warner and Edith Honan | Reuters – 6 hrs ago
HARRISBURG, Pennsylvania (Reuters) – Pennsylvania’s capital, Harrisburg, filed for bankruptcy on Wednesday in a desperate bid to resolve its debt crisis, setting up a showdown with the state over control of the city.
Harrisburg becomes one of the most-high profile cities to opt for the little used Chapter 9 of the U.S. bankruptcy code, most notably tapped nearly 20 years ago by Orange County, California.
The Pennsylvania capital’s crisis has been a year in the making as the city of about 50,000 struggles to pay for critical services as well as roughly $300 million in debt incurred from an expensive revamp of its incinerator.
While city services should continue uninterrupted, the move has caused confusion about how bills will be paid.
"We’re getting calls from vendors, wondering if they are going to get paid," said Brenda Alton, the director of city’s department of parks, recreation and enrichment. "I feel it is a bad decision."
Municipal bankruptcies are rare. But if Harrisburg is successful in winning concessions with bondholders, pensioners and other stakeholders, it could lead other financially troubled cities to seek bankruptcy.
