Harrisburg, PA’s First Black Mayor, Linda Thompson, Has Bankrupted City; I Wonder Where the Money All Went?

By Nicholas Stix

Harrisburg leaders believe bankruptcy is inevitable for city
Saturday, March 17, 2012, 1:32 PM
By Patriot-News Editorial Board

The Patriot-News Editorial Board met Thursday with City Controller Dan Miller [white], Council President Wanda Williams [black] and City Treasurer John Campbell [white]. Below is an excerpt of the conversation.

Q: Where do things stand in the city now?

Dan Miller: We’re going into bankruptcy. The question is will we have the assets or won’t we have the assets [when we do]. Just because we adopt a plan, that’s not going to solve the problem. I think [receiver] David Unkovic knows the same thing.

Wanda Williams: I had an opportunity to talk to Jefferson County, Ala., officials last weekend. They tried to derive a plan there similar to Unkovic’s, but the people were up in arms and they said no, we are not going to allow you to sell our assets. What you’re going to do is sell our assets and we’re going to be left with nothing, and we’ve been telling Unkovic that. Where do you derive the revenue from after you sell all our assets? Now Jefferson County has filed bankruptcy, and the judge is making that determination.

Their assets are safe for the time being. I see this as a ploy — Gov. Corbett has asked [Unkovic] to come in and do a plan, but in the interim, we’re going to be selling assets and filing for bankruptcy.

Q: How significant was the city’s general obligation default on March 15?

Miller: I suspect we’re not paying any more debt for the rest of the year. I’m not the decision maker, but if you’re not going to pay it now, you’re not going to pay it anymore. Unkovic is projecting a $9.5 million deficit. I’m calculating $15 million. We’re both acknowledging it’s a big deficit for this year. Our general debt service is about $11 million a year. Even if you sell the assets, it’s not going to impact the budget. We’re out of money.

John Campbell: We were projected to potentially run out of money by June or July. Since we’re missing this bond, that pushes us forward in the year, but there’s no guarantee we’ll make it to the end of the year, but there’s no guarantee unless we miss the second bond payment.

Q: Is it your belief that there is a receiver in Harrisburg right now so Wall Street gets its money?

Miller: I believe it’s completely about that. They and the county have hired lobbyists, and they know we’re going bankrupt, too. That’s why they’re pushing so hard to sell assets so who gets the money — their friends on Wall Street.

Q: What do you do about the fact that the governor and state Legislature are preventing the city from filing bankruptcy and they may extend that moratorium?

Miller: Unkovic will be able to sell the assets and ultimately we will run out of money, and what else do we do? The only way the [Unkovic’s] plan works is if there are massive concessions from the creditors, AGM and the unions. The only way we’re going to get that is in bankruptcy court because Dave Unkovic doesn’t have the power to do it.

Williams: We are going to challenge July 1 if they try to extend. We need to challenge it again.

Miller: Our lawsuit was “dismissed without prejudice,” so we’ll definitely be back. At the end of the day, the judge said we did make a point — that if the plan is going to ultimately fail, it doesn’t make sense to sell our assets. I wanted to stand up and cheer.

Q: What role is Mayor Linda Thompson playing? [N.S. I added the link.]

Williams: Everywhere I go ... when I went to a conference, for example, a guy from Minnesota asked me how Mayor Thompson is doing and he said to me, “I follow Harrisburg.”

Your whole conversation centers around this woman. For some reason, she is not popular at all. And she brings religion into it. You don’t want to bash your mayor, but ...

Miller: We are sitting here together ... council, treasurer, controller. We all talk to Unkovic. We all get along. We are not a dysfunctional government. With one exception, and that’s really the issue.

Q: One of the major frustrations with Council is that you don’t have a plan. What’s your plan?

Miller: I just get frustrated why people don’t want to go into bankruptcy. It’s such a logical situation ... here’s what would happen in bankruptcy: All the union contracts would be set aside. All the debt payments would be stopped. Then we would take what our revenue is and ask what can we afford? That’s where a plan would come together that is affordable based on the facts. It can only happen in bankruptcy. To say we don’t have a plan ... that’s where it’s developed: in bankruptcy.