As we've said before, the fiscal problems gripping Philadelphia are far from unique. Now, we learn that the city of Harrisburg is on the edge bankruptcy. How did the city get into such dire straights?
The biggest problem is that Harrisburg borrowed way too much for a new trash incinerator. The city -- which still owes about $282 million as a result of the deal -- simply does not have enough money to keep up with payments. Harrisburg is considering a number of options, including declaring bankruptcy or asking for a state takeover.
Yesterday, Mayor Linda Thompson invited Gov. Ed Rendell to come speak to Harrisburg's City Council. Thompson hoped that they could learn from the governor, who led Philadelphia out of bankruptcy in the early 1990s when he was Mayor.
Rendell suggested the seven city council members and the mayor to put aside differences and work together on a plan. He said that during his tenure in Philadelphia, its city council and his administration dealt with its fiscal issues by forming one voice to get the city back on track, regardless of individual preferences. The city council did not always agree on his proposals and he didn't always like their modifications, but the two governing bodies focused on a common target to get Philadelphia back on track.
That seems pretty obvious, although many elected officials-- including those in the state legislature-- seem unable or unwilling to put aside their differences to come up with compromises to solve budget problems.
Beyond urging local officials to work together, Rendell had another message. He told Council that they shouldn't expect any help from the outside to solve the problem.
The governor reiterated to the city council that a state or federal bailout was not an option for Harrisburg. What Pennsylvania can offer the city, he said, are business incentive programs that would build the city's private sector by encouraging businesses to relocate or expand their operations in Harrisburg. Rendell said this is a key component of creating more jobs in the city and expanding its tax base.
So, why does this matter for Philadelphia? First, Harrisburg's situation is a reminder that poor policy choices -- like borrowing way too much for a new trash incinerator -- are the first step towards fiscal problems. Now, Harrisburg is getting whacked with the impact of the recession and poor financial management.
Second, Gov. Rendell's message that there is no help coming from the state has obvious implications for Philadelphia. That may be an indication that the state budget may not contain much for Pennsylvania's cities, especially in areas like human services that are likely to be significantly cut.
Finally, we can't help but note the potential psychological impact of the state's capitol city falling into disarray. At the very least, it's a reminder that many cities across the commonwealth are facing serious fiscal problems.