Harrisburg, Pa., Declares Bankruptcy

Filing means capital will lose state aid
By Kevin Spak,  Newser Staff
Posted Oct 12, 2011 9:12 AM CDT
Harrisburg, Pa., Declares Bankruptcy
The Harrisburg Incinerator, seen in this file photo, is responsible for much of the city's debt problems.   (AP Photo/Carolyn Kaster, File)

(Newser) – The capital of Pennsylvania filed for Chapter 9 bankruptcy protection last night, defying a new state law created to prohibit it from doing so. The Harrisburg city council voted 4-3 to take the drastic step, with supporters arguing that the state’s proposed recovery plan was unacceptable, Bloomberg reports. “We’re not incompetent. We’re just not going to let you run us over with the train anymore,” one councilwoman said, the “you” referring to state officials.

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The lawyer who handled the bankruptcy filing accused state officials of looking out for bondholders rather than taxpayers. “That’s what it’s all about. The governor hasn’t brought 10 cents to the table,” he told WGAL 8. “I think we can do better in a structure in the bankruptcy court.” But the move will cut off state aid under a law passed in July, the three dissenting council members pointed out. “We still don’t have money,” one councilwoman said, worrying that the plan would provoke costly litigation. (Read more Harrisburg stories.)

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