Economics

Harrisburg, Pennsylvania, About to Go Up in Smoke Due to Incinerator Overruns

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From the Wash Post about the Keystone State's capital:

Harrisburg's crisis has been precipitated by a malfunctioning municipal incinerator, whose ill-fated expansion was promoted as a potential moneymaker. But after seven years of cost overruns, construction delays, design problems, financings, refinancings and more refinancings, the city is on the hook. The $68 million bill is part of $288 million in outstanding debt related to the project.

The debacle is pushing the 150-year-old state capital toward default. The fiscal crisis has shaken the city, which over the past decade has spruced up its riverfront downtown and created tourist attractions in large part through low-cost financing afforded by municipal bond sales. In one notorious example, former mayor Stephen R. Reed spent nearly $8 million from the public authority that owns the incinerator to buy wagon wheels, rifles and other memorabilia for a Wild West museum that never opened. And like a homeowner who binged on cheap financing, this city is underwater financially.

You got that, it's this one incinerator project, see, that's got the city in a jam, right? Otherwise everything would be hunky-dory. Oh yeah, and a mayor who dipped into funds for crap…

None of this could possibly point to a long-term pattern of stupidity, corruption, and malfeasance in Pennsylvania's answer to Bonn and Brasilia. The Post notes later in the article that the incinerator debacle comes "on top" of a $9 million deficit in the current budget. How'd that happen if things were going so great except for that friggin' incinerator? It's all so complicated: Who would have thought that spending more and more money independent of the revenue to pay for it could lead to deficits?

The bold recovery plan 21st century Harrisburg?

Not only is the city contemplating layoffs in its 537-employee workforce, it is asking for contract rebates, considering the sale or long-term lease of revenue-producing assets, including parking garages and water and wastewater systems, and asking creditors to restructure and forgive debt.

"We all need to take some hits. I'm not going to let the city sink. I'm not going to let the city auction off all its assets and have nothing while everyone walks away with a sweeter deal just by renegotiating and restructuring and taking us further and further out, and you still get every dime you had in the beginning of the deal," said Mayor Linda D. Thompson.

Contemplation is for monks, Madam Mayor, not chief executives in a part of the country that is losing people along with money. And if Harrisburg is anything like every other city in the country (I'm totally skylarking here, I know), then those "revenue-producing assets" cost taxpayers far more than they bring in. Yes, parking meters and garages and municipal swimming pools and fairgrounds and all the rest bring in the odd dollar and cent; the political and economic infrastructure that supports them always costs far more. Any city that is still running its water treatment plant is in the patronage business, not actually trying to give its ratepayers the best service at the best price.

Whole story here.

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