ABC27 WHTM Harrisburg running out of cash to pay workers, creditors

Harrisburg running out of cash to pay workers, creditors

With Harrisburg running out of cash, Mayor Linda Thompson may be faced with a difficult choice in the coming weeks-- pay city workers or pay the city's lenders?

Of course, this isn't something hundreds of Harrisburg city employees want to hear. September is shaping up to be a difficult month financially. Big bills are due, and a loan that's supposed to help hasn't come through yet.

"This is serious and if in fact we don't make payroll, it will be the first time I think that people really understand how dire things are at the city," Harrisburg City Controller Dan Miller said.

Miller had his eye on the month of September for a while. He said he warned the Thompson administration about the risk of running out of money.

On September 15th, Harrisburg owes $3.3 million on a loan payment, not related to the incinerator. Plus, payroll next month will cost the city $3.1 million.

"It's going to be very difficult to make all those payments," Miller said.

That's because Miller's projected $6 million budget shortfall this year is starting to show.

City Councilwoman Patty Kim says there is another threat to worry about: the number of lawsuits pending against the city.

"And if a judge as early as next month can say you have to pay all debt services first before basic services, that's when we're going to see no police and no fire," she told us. "I'm not for scare tactics, but we are at that point."

The Thompson administration has a fix:

The Harrisburg Parking Authority is supposed to get a loan, and hand over a $7.5 million lump sum to the city. That would apparently be enough to bridge the budget gap. Problem solved. But there's no loan yet, and time's running out before the city's bills are due. Without the financing, Thomspon may have to choose who to pay. 

"It's not guaranteed," said Kim. "We're still waiting to get that green light and if it does and council approves an extension of a lease, then we may be able to get out of it."

"Our best guess is the parking authority deal goes through before September 14th," Harrisburg Communications Director Bob Philbin said. "If it doesn't, we will probably not make our bond payment, but we will make payroll."

"I do suspect if we don't make the debt service payment, we may be able to make all the payroll payments through the end of the year, if we really clamp back and stop paying any vendors," Miller said.

Missing a bond payment could land the city in court again. Harrisburg has already been sued by its lenders for not making incinerator debt payments those cases are pending. Thompson has said before, making September's payment is a priority.