Governor Signs Senate Bill 1151 Authorizing State Takeover Into Law

FinanceLocal GovernmentPoliticsHarrisburg (Dauphin, Pennsylvania)Public OfficialsCredit and Debt

“It’s a sad day in Harrisburg and I’m trying to prevent a state takeover,” said Harrisburg Mayor Linda Thompson on Thursday.

Earlier on Thursday, Pennsylvania Governor Tom Corbett signed Senate Bill 1151 into law clearing the way for state takeover of the capital city.

“We have a Governor that is saying we can’t solve our business and I disagree with that,” said Thompson.

Prior to Thursday’s historic signing by the Governor, Harrisburg City Council struck down two previous Act 47 Recovery Plans meant to help the financially strapped city dig out of nearly 310 million dollars in debt.

Thompson said,” It’s embarrassing – at least the behaviors of the elected officials.”  She added,” It’s solvable.”

One prevision in Senate Bill 1151 does give city leaders roughly 30 days to author their own financial recovery plan.

Harrisburg’s website outlines section 607 of SB 1151 below pertaining to the consent-agreement process.

 1. Within 8 Days of the declaration of fiscal emergency, the mayor and council "shall convene a special public meeting to negotiate a consent agreement."  The meeting "shall be attended by the secretary (DCED) or secretary's designee."

2. The consent agreement "shall incorporate a plan setting forth measures designed to provide long term financial stability to the distressed city after the termination of the fiscal emergency."

3. The plan shall include all of the following:

* "Continued provision of vital and necessary services."

* "Payment of LAWFUL financial obligations of the distressed city and authority."

Including, debt obligations, municipal securities, lease rental obligations, legal obligations and consensual modifications of existing obligations, EXCEPT AS OTHERWISE ORDERED BY A COURT OF COMPETENT JURISDICTION."

* The "timely deposit of required payments to the pension fund for the distressed city and each authority or the fund in which the distressed city and each authority participates."

* Legislative and administrative action to be taken by the elected or appointed officials of the distressed city during the term of the consent agreement. [This could become a calendar of events and actions.]

4. The consent agreement "may include:"

* The sale, lease, conveyance, assignment or other use or disposition of the assets of the distressed city or authority.

* Approval, modification, rejection, renegotiation or termination of contracts or agreements of the distressed city or authorities.

* Execution of new contracts or agreements.

5. The Consent Agreement "may not included any of the following:"

* Projection of revenue from a tax or tax rate not currently authorized by law.

* Provisions that unilaterally abrogate, alter or otherwise interfere with a lien, charge, covenant or relative priority this held by a holder of a debt obligation of a distressed city; and granted by the contract, law rule or regulation governing the debt obligation.

* Provisions that unilaterally impair or modify existing bonds, notes, municipal securities or OTHER LAWFUL CONTRACTUAL OR LEGAL OBLIGATIONS OF THE DISTRESSED CITY OR AUTHORITY, EXCEPT AS OTHERWISE ORDERED BY A COURT OF COMPETENT JURISDICTION.

* Provisions that authorize the use of proceeds of the sale, lease, conveyance, assignment or other use or disposition of the assets of the distressed city or authorities in the a manner contrary to section 707.

[707 defines how the proceeds must be applied to debt elimination; any surplus falls under the authority of the receiver.]

*Any increase in the rate of an earned income tax imposed on nonresident workers.

6. This plan and Consent Agreement must be presented to the secretary within 20 days of the declaration of emergency. [If the meeting is on the 8th day, the plan has to be presented 12 days later.] The secretary shall approve or disapprove of the plan within three days.

7. If approved, the council shall enact the plan as an Ordinance within seven days of approval by the secretary. [Total time 30 days from declaration].

8. The Ordinance shall provide that, in the event of a breach or unilateral modification of the consent decree by the council, elected or appointed official, the Governor may institute or reinstitute proceedings under chapter 7. [Chapter 7 concerns the "take over by the receiver".]

9. In addition to breach of modification of the consent agreement, the following shall be deemed consent to proceedings under Chapter 7:

*Failure of the council to convene, or failure of a quorum to participate in the special meeting required above.

*Failure of council or mayor to enact a valid Ordinance.

*Failure of the distressed city to comply with the consent agreement or provision of an Ordinance enacted.

*Enactment of an amendment to the Ordinance in violation of number 4 above.

*The Ordinance may be amended upon the approval of the secretary.

*A collective bargaining agreement or arbitration settlement executed following enactment of the Ordinance MAY NOT IN ANY MANNER VIOLATE, EXPAND, OR DIMINISH the provisions of the consent agreement.

 

Copyright © 2014, Los Angeles Times
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FinanceLocal GovernmentPoliticsHarrisburg (Dauphin, Pennsylvania)Public OfficialsCredit and Debt
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