On Oct. 19, the House passed Senate Bill 1151 by a vote of 177 to 18.  It was signed into law by Governor Tom Corbett on Oct. 20.  The legislation lays out a process for returning the City of Harrisburg to financial stability.  The city’s fiscal condition impacts the entire region and should be of great concern to us all.  I felt it was necessary to take this action now because of the inability of city leaders to agree on a recovery plan.  My hope is that this legislation finally gets Harrisburg on the right track. 

Overall goal of legislation

To continue vital and necessary public services in a distressed third class city that has repeatedly failed to enact a solvency plan and, through a potential receivership, the city gets professional assistance to help it return to sound financial footing. 

Details on how the process will work

The Governor will have the authority to declare a fiscal emergency in a distressed city that is unwilling to accept or adopt a solvency plan, is insolvent or projected to be insolvent in 180 days or cannot ensure provision of vital and necessary services for its citizens. Once the Governor declares the fiscal emergency, he may direct the Secretary of the Dept. of Community and Economic Development (DCED) to file a petition in Commonwealth Court to appoint the individual named in the petition as a receiver for the distressed city.

A fiscal emergency requires the DCED Secretary to develop an emergency action plan within 10 days of the Governor’s declaration. During the emergency, the Governor is empowered to ensure that services continue and that the city pays for these services.

Within eight days of the declaration of fiscal emergency, the governing body and chief executive officer must convene a public meeting to negotiate a consent agreement that incorporates a plan for long-term financially stability. The consent agreement may not include provisions for an increase in the rate of an earned income tax on commuters and must be reached within 20 days of the declaration of fiscal emergency.

During this time, the city is prohibited from filing for federal municipal bankruptcy; however, subject to existing Fiscal Code limitations, the receiver would be allowed to file for bankruptcy if the Secretary authorizes it.

If it reaches a consent agreement, the governing body must enact an ordinance within seven days of the agreement’s approval by the secretary. The secretary has three days to approve or disapprove the consent agreement. If approved, the governing body has seven days to enact the consent agreement via an ordinance.

Within 15 days of the city’s failure to adopt a consent agreement via ordinance, the court must hold a hearing and if it finds that 30 days have passed since the fiscal emergency was declared and that, during this time, the city has failed to adopt or implement an acceptable consent agreement, it must grant the petition for receivership.  The court has 60 days following the filing of the petition to issue an order. The court order directs the receiver to develop a recovery plan and submit it to the court, the city and the secretary.

The receiver must present the recovery plan to the court within 30 days and, in turn, the court must conduct a plan confirmation hearing within 30 days and must confirm it within 60 days unless it finds clear and convincing evidence that the plan is inadequate. Court confirmation of the plan imposes on the elected and appointed officials or an authority a mandatory duty to follow the recovery plan.

A municipal financial recovery advisory committee  - comprised of the mayor, the council president, one member appointed by the county commissioners and a member appointed by the governor -  is formed and must meet with the receiver at least twice a month to discuss the recovery plan.

Receivership terminates within two years but the secretary may file for extensions and the court may grant them if it finds that further implementation of the recovery plan is necessary.

New Law Facilitates Harrisburg Recovery

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