Finance director Bruce Weber, left, and Act 47 coordinator Fred Reddig at a Harrisburg City Council meeting in August.
It was a raw deal, paying off reckless financiers out of the pockets of the common man. Or it was a fair shake, calling for shared pain on the road to stability. Or it was a best bet after years of acrimony, and a hedge against bankruptcy’s unknowns.
These are competing views of the Harrisburg Strong Plan, the 2013 blueprint for Harrisburg’s financial recovery. And two years in, they are still held, and vigorously debated, by the city’s top officials.
Harrisburg Mayor Eric Papenfuse, who supported the plan as a “window of opportunity” during his campaign for office, said in an annual address in September that it wasn’t producing enough revenue and should be revised.
And as recently as Thursday night, during a meeting of the city’s audit committee, Harrisburg’s controller, top lawyer and state overseer aired fundamental disagreements about the fiscal plan’s merits and fairness.
“When I look at this plan, I don’t see anybody caring about me, Vince, Alex, any of these guys,” said Controller Charlie DeBrunner, referring to audit committee members Vince Fogarty and Alex Reber. “And I would really like somebody, when they sit down at the next plan, to go through the plan and say, ‘What do we need to live here?’”
DeBrunner’s remarks came nearly an hour into a meeting that, up til that point, had been focused on the city’s annual audit, which was completed in a timely fashion—though still not as early as some would like—for the first time since 2008.
They were prompted, DeBrunner said, by the city’s recent request that residents bag their own leaves to assist a short-staffed public works department. That request, which might appear minor in itself, nevertheless hinted at the long shadow of Harrisburg’s financial collapse, felt in high taxes and inadequate city services.
“I think I’ve contributed my fair share—what I pay to park, my taxes,” DeBrunner said. “And now the city wants me to rake my own leaves, because they don’t have the money.”
Harrisburg’s recovery plan, drafted in a period of intense state oversight, was ultimately the state’s bid—vetted by local officials and a state court—to work out a deal between the city and its creditors that could avert bankruptcy.
It paid off hundreds of millions in debt, and restructured tens of millions in other obligations, in part with concessions from the city’s creditors. But it came at a bitter cost to residents, whose local income taxes and parking rates and fines doubled.
That has left residents like DeBrunner angry at the prospect of paying more for less. “We’re a relatively calm and decent people, frustrated beyond belief,” he said of neighbors unhappy at the prospect of bagging leaves in his tree-lined neighborhood. “Somebody needs to begin to consider the quality of lives we’re living in the city.”
And it has left many asking, again, whether the city’s creditors, like bond insurers Ambac and Assured Guaranty Municipal, have taken their fair share of the pain.
“They invested here,” DeBrunner said. “It seems to me, as an investor myself, I have to assume some risk sometimes when I invest. And I don’t see any of that.”
Yet others, like Fred Reddig of the state Department of Community and Economic Development, the coordinator overseeing the city’s recovery plan, point to the sacrifices it required from creditors. Soon after DeBrunner spoke, Reddig, who was at Thursday’s meeting to present a quarterly progress report, weighed in.
“The creditors already have shouldered a portion of the responsibility,” he said. He cited the $36 million carved out of the state’s debt fix—a long-term lease of city parking, largely backed by the boosted rates and fines—and set aside to pay city bills and fund some infrastructure improvements and employee retirement benefits.
“If you look at Rhode Island,” Reddig added, referring to a 2012 bankruptcy fix for that state’s tiny city of Central Falls, “their state gave creditors deference over everybody else. I disagree with that, but that’s what they did.”
“Well, it feels like that’s what’s happened here, Fred,” DeBrunner interrupted. “I live here. I’m not looking at this as a consultant on the outside.”
At the reference to bankruptcy, city solicitor Neil Grover chimed in with a reminder about the Pennsylvania Constitution. Under one interpretation of state law, he said, government promises to bondholders are sacrosanct, and bankruptcy amounted to a gamble over whether state law or federal bankruptcy code would prevail.
“No one has tested that,” Grover said. “Anyone that tells you they can predict what the other side of it is is kidding you.”
In that context, the recovery plan was its own kind of bet—namely, that negotiating some amount of shared pain from creditors was better than risking a judicial decision that the city must pay creditors every dime it owed them.
The discussion reached at least one point of accord, with all three agreeing the city ultimately needed more taxpayers. But a discouraged DeBrunner noted it would be hard to attract them when taxes were so high and services so hard to provide.
After a few minutes, Reddig returned to his quarterly report, and the audit committee went back to its business. The debate over the recovery plan’s legacy, in that room as elsewhere in the city, was left unresolved.
