Harrisburg should end the year with enough money in the bank to pay off its accumulated debt, according to a key city official.
Appearing before City Council this week, Controller Charlie DeBrunner told council members that his office projects a $34 million fund balance by year-end, which could be enough to pay off the city’s bonds, he said.
“I think it’s pretty clear that we can if this holds up,” DeBrunner said. “We’re not in the administration, so we can only see what’s happened, not what’s going to happen. We don’t have a crystal ball that the finance people and the mayor do.”
In contrast, Mayor Eric Papenfuse has repeatedly stated that the city does not have enough savings to pay off about $25 million in debt, plus settle ongoing city expenses and retain an adequate reserve fund of $11 million to $13 million. He’s also said that, with a healthy fund balance, the city would regain a credit rating and be able to re-enter the bond markets for the first time since defaulting on its debt a decade ago.
For months, Papenfuse has criticized council for refusing to act on his proposed bond refinancing, introduced in early June, which would significantly reduce the city’s general obligation bond interest rate, which currently stands at 6.75%.
Council President Wanda Williams and other council members have said that they want to use the city’s savings to pay off the debt all at once, as opposed to refinancing it.
DeBrunner told council members this week that, by paying off the debt early, the city could save some $14 million in accumulated interest over a planned 10-year repayment period.
The Intergovernmental Cooperation Authority, a body created by the commonwealth to help oversee Harrisburg’s finances, has urged the administration and council to meet to resolve their differences over financial data and to reach an agreement on a path forward. As of late last month, the two sides had not yet met.
Papenfuse has said that he welcomes alternatives to his refinancing plan, but council has not formally introduced legislation to pay off the debt in part or in full.
“I’m open to ideas,” he told TheBurg previously. “I haven’t seen anything on their part.”
Papenfuse this week said that, if council had acted in June, the refinancing could have been completed already, with the interest rate cut in half to the financial benefit of the city.
DeBrunner said that another bond payment is slated for January, so council could wait until then to see exactly how much savings the city has before making a decision on whether or not to pay off the debt.
The good news is . . . we don‘t have to do anything until we know,” he said. “We don’t have to pay any money until January 2022, so we’ll know exactly what we have then.”
If you like what we do, please support our work. Become a Friend of TheBurg!