OPINION | Sheila Stocks-Smith
Harrisburg, Pa., and Springfield have some interesting and frightening parallels. Like Springfield, Harrisburg is the capital city and the county seat. The city has a population of nearly 50,000 with a three-county regional agricultural area of approximately 500,000. Like Springfield, Harrisburg highlights its significance in American history and its economy is heavily reliant on government.
Harrisburg also shares with Springfield a major public infrastructure project originally unveiled as a long-term economic engine. But something went terribly wrong in Harrisburg and the city is in a free-fall.
It began when the city decided to retrofit its existing waste-to-energy resource recovery facility (incinerator) that burns garbage and uses the heat released to generate electricity. Environmental problems and continued failures to meet federal regulations dogged the facility from its start, ultimately causing a shutdown by federal regulators in 2003. Owing $104 million but needing the plants’ critical revenues, the city decided to invest more to upgrade the facility. In 2004, $120 million in new debt was issued to retrofit and expand the facility.
A series of failures by the contracted construction company set Harrisburg’s nightmare scenario in motion. Vicious political battles, lawsuits, service reductions, tax increases, forensic audits, state receivership, bankruptcy filings, charges of gross mismanagement and calls for federal investigations have engulfed the city since. This month the city defaulted on general obligation bonds after several past revenue bond defaults and the city budget is still in the red by $5 million. Springfield should pay attention to Harrisburg’s plight.
Two months ago, City Water, Light and Power’s top managers delivered some sobering news to the city council. They explained that, despite numerous attempts to manage declining revenues, the power plant was facing major problems and urgent action was needed to avoid defaulting on its bond covenants. CWLP recommended a 9.5 percent rate increase to stop the bleeding. The council rejected the recommendation outright and told CWLP to return with other options.
The council seemed shocked and angered by these developments and weeks of intense public discussion followed. Responding to calls from some aldermen to present a plan with no rate increases, CWLP outlined a series of unimaginable cuts. Four aldermen responded with an alternative, proposing a three-year “share the pain” plan that reduced the size of the originally proposed rate increase and added cost-cutting measures. Ultimately, an amended version with a twoyear rate increase plus cuts was approved.
Disaster averted, the issue has quickly faded into old news. But Mayor Mike Houston and CWLP directors insist that problems still loom.
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