A judge turned down Harrisburg’s bankruptcy case, and now the city needs to rehabilitate its financial situation under the state’s guidance. The case was dismissed because it violated the state’s rules laid out for financially struggling cities. The code that was violated is Chapter 9 of the bankruptcy code. Chapter 9 of the bankruptcy code applies exclusively to municipalities and assists them in the restructuring of debts. According to Investopedia.com, a Chapter 9 bankruptcy is “A bankruptcy proceeding that provides financially distressed municipalities with protection from creditors by creating a plan between the municipality and its creditors to resolve the outstanding debt. Municipalities include cities, counties, townships and school districts.”
The judge that turned down the case was Judge Mary D. France, who said, “For Chapter 9 bankruptcy to work, all of the branches of the municipality must be on the same page. Therefore, I find that City Council was not authorized to file the petition on Oct. 11.” Harrisburg is approximately $300 million in debt and needs to find a way to get out of the red. The state is taking over Harrisburg’s finances in order to get the city back on track. The capital is going to try to get out of the hole with the state’s help and by making better financial decisions. It could take many years to become financially more secure.
Starting next week, despite the financial problems in Harrisburg, politicians will still receive their annual three percent raise. Due to the automatic cost-of-living adjustment, legislators will now earn $82,026, up from the current $79,623, and four legislative caucus leaders will now earn $118,845 per year, up from $115,364. The raises of top executive branch and judicial positions will take effect on Jan. 1. Governor Tom Corbett’s annual salary will increase to $183,250, up from $177,888, but the governor said he will not take the raise and will instead donate it to a charity.
The three percent annual raise is affecting many individuals and businesses in Harrisburg. According to the Wall Street Journal, schools are closing, police personnel and fire fighters are losing their jobs and small businesses are struggling because of the poor financial decision-making. Politicians are getting even more money that the government does not have.
Sophomore Derek Kline is a Harrisburg native who is following the development of the bankruptcy suit. “My family owns a small business that is in Harrisburg and is affected by the bankruptcy. I work at the family business every summer and whenever I have time to help. Over Thanksgiving break, I worked at the shop and noticed it was a lot slower than usual,” Kline said. “I hope everything works out in Harrisburg because it is a great city.”
Another Etown student from the Harrisburg area is sophomore Jeff Royer. “When I was home for break I was watching TV, and all that was on TV was the news of how Harrisburg is going bankrupt,” Royer said. “I am not exactly sure why Harrisburg is bankrupt, but the state should really step in as soon as possible and take over and get Harrisburg back on track.”
Harrisburg’s political leaders plan to meet to work on strategies to get out of debt. There are many options and programs that can be put into place and the state will step in and help Harrisburg. Further discussion regarding Harrisburg’s financial situation will continue in the upcoming weeks.