In December 2011, just as Harrisburg was beginning life under a state-appointed receiver, I wrote the following:
“Harrisburg is about to enter a new period, a time it’s never before experienced. The state takeover is unlike the city’s previous downs. In this down, Harrisburg is almost completely at the mercy of outsiders, who, most certainly, will not have the interest of the people who live here as a first priority.”
In other writings, I described receivership as an attempt to force the thrice-rejected Act 47 plan down the city’s throat, which would lead to a fire sale of city assets so creditors complicit in its financial crisis would be paid in full.
And so it seemed.
The receivership legislation appeared designed to punish Harrisburg more than help it, to ensure that creditors would get all their money, to protect suburban commuters, to stick it to defiant members of City Council.
Why else would bankruptcy be banned, would a commuter tax be forbidden, would a regional sales tax be off the table? What else could explain the ridiculous timeframe that gave the receiver just 30 days to draft a recovery plan, with the expectation that he’d have six months to implement it? Clearly, the fix was in.
Fast-forward two years.
In late January, the state announced that it expected the receivership to end on March 1, which caused me to think back on my initial impressions, thoughts and writings. For the most part, I think my analysis at the time was correct. The enabling legislation, SB1151, was intended to force city residents to bear this burden. Why, then, did the receivership turn out so differently?
Last month, our columnist, Tara Leo Auchey, credited the people of Harrisburg for influencing and inspiring the first receiver, David Unkovic, who, moved by their plight, drafted a recovery plan that treated residents as fairly as possible.
Indeed, Unkovic repeatedly made himself available to the public and, during his short but critical tenure, seemed far more concerned with the predicament of residents than I ever would have imagined on that cold day in November 2011, when, with great skepticism, I watched him being introduced at a press conference in the state Capitol.
At his core, however, Unkovic is a finance guy, a bond attorney. While he showed remarkable cause with the people of Harrisburg, he showed even more outrage over how his passion, the thing he had dedicated his life to—municipal finance—had been perverted by the Reed administration and its many enablers.
“It stunk like a kettle of rotten fish,” Unkovic said of the incinerator financings in testimony before a state Senate committee hearing. “This is the worst set of financings I’ve ever seen.”
Once he unraveled the nonsense behind the incinerator, the museum artifacts, the deceptive city budgets, Unkovic felt compelled to right the situation as best he could. Yes, Harrisburg had to pay down its debt by shedding some valuable assets, but that, he believed, could be done in a fiscally responsible way that also didn’t punish the people, who largely had been left in the dark during the Reed years and then left holding the bag.
In late March 2012, Unkovic resigned abruptly, citing unyielding pressure from creditors unhappy with his focus on fairness. That turn of events had an “Empire Strikes Back” quality to it, and many residents, myself included, again feared that the state would enforce the payback of creditors with little concern for the consequences to the city.
But that didn’t happen either.
The new receiver, Air Force Maj. Gen. William Lynch, couldn’t have been more different from Unkovic. He had no municipal finance experience, did not readily engage the public and had a direct, taciturn style. However, he sustained the focus on fairness, and his final recovery plan boldly built upon his predecessor’s already-creative approach to solving Harrisburg’s financial crisis.
Just as importantly, the receiver’s main consultants and advisers were finance people, ones who shared Unkovic’s affront over the financial games that had buried this city in debt. So, an impressive, experienced team of professionals bridged the two tenures, despite turmoil at the top.
I’ve written previously that I believe the receivership is ending too quickly, that it would have been better to wind it down over the course of this year. I continue to think this. However, I am glad that Harrisburg’s experience with state intervention ended up so much better than I had expected and, I believe, very differently than its architects had envisioned.
With the backing of Gov. Tom Corbett, Unkovic, Lynch and their “geniuses” (as Lynch liked to call his main staffers) crafted a plan that tried to do right by the city, its residents and the principles of good municipal finance, while completing their assigned job of settling Harrisburg’s mind-blowing debt.
As we wave good-bye to the receiver, I am thankful that Harrisburg has a chance to build a brighter future, something unimaginable until recently. And, looking back at the language of SB1151, I’m also thankful that the law of unintended consequences finally seemed to favor this long-luckless city.
Lawrance Binda is editor-in-chief of TheBurg.
