CNN/Fortune talks about the bankruptcy status and situation in Vallejo, but mentions something else a lot closer to home.... namely talk that Harrisburg may file for bankruptcy within the month. The blurb almost in passing is:
Harrisburg, Pa., could be in the ballpark. A top city official said this week that the capital of the sixth-most-populous state may file for protection from its creditors as soon as March 1.I missed that entirely, though it was in the WSJ a few days ago. More in BusinessWeek yesterday. Their bond rating has been dropped almost as far as the casino's here.. Some folks have argued with me in the past that Pittsburgh could never file for bankruptcy because 'Harrisburg' wouldn't allow it... So what does it mean if Harrisburg proper is clearly talking about a straight up Chapter 9 Federal bankruptcy.
The thing that is really fascinating is why Harrisburg is in such a pickel. Bad planning on their part? Rampant spending or dropping tax revenues. Maybe mounting pension liabilties or too many perks for their local pols? None of the above. They are merely guarantors of part of a loan made by their housing authority for a trash incinerator of all things. There has to be a joke in there somewhere about the need to get rid of all the paper being generated by state government these days... should bring steady biz to a trash incinerator?
But the fact that Harrisburg, the municipality, could fail because of spending by a local public authority really ought to get those folks in Harrisburg, the euphemism, thinking about the mess that is governance in Pennsylvania. What potential debt is the city of Pittsburgh on the hook for via its public authorities? Someone might want to add up what that comes to these days.... and then tell those folks at Moodys maybe.
I honestly can't believe the folks running the state would let the state capital do any such thing. Someone will call in Act 47 on steroids or something. but you never can tell what will happen in Harrisburg? Sheer dithering is often the default path out there; yet those bond payments come due no matter.