Harrisburg mayoral candidates talk bankruptcy vs. receivership - abc27 WHTM

Harrisburg mayoral candidates talk bankruptcy vs. receivership

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Bankruptcy or receivership? That is a choice Harrisburg voters will have to make when they punch their ballot next Tuesday.

The choice is not only between four candidates, but two different philosophies. Mayor Linda Thompson and candidate Eric Papenfuse are strong advocates for the recovery plan drafted by a state-appointed receiver. Dan Miller believes bankruptcy is the best avenue to fix failing finances, and Lewis Butts is a strong supporter of "innovation."

So, once and for all voters must pick between bankruptcy and recovery.

Thompson's involvement with the Act 47 process and her advocacy for Receiver William Lynch is well documented. According to a poll conducted for abc27 News by Susquehanna Polling & Research, 60 percent of voters said they had "no confidence" in the mayor's ability to solve Harrisburg's fiscal problems.

As a service to voters, the focus will be on the vision and views of Dan Miller and Eric Papenfuse.

Papenfuse has run his campaign on telling voters that they do indeed have a choice to make.

"It's going to come down to two choices," he said. "It's going to come down to whether you want bankruptcy for the City of Harrisburg as Dan Miller does, or whether you want to get about the process of recovery."

Miller as city controller has maintained for quite some time that bankruptcy is the city's best option, but many voters are unsure why. Just the word itself often carries a negative connotation.

"Bankruptcy is not the problem," said Miller. "Bankruptcy is the tool that helps solve the problem."

Miller explained "insolvency" is the true problem. Miller said he has decades of financial experience and is dumbfounded why most continue to believe those who do not.

He said besides the $360 million in debt, the city's growing structural deficit is more alarming. Miller said this year-to-year finances and continued borrowing would soon hit a glass ceiling.

"If we're $10 million [short] about two years ago, we're $10 million short last year, and we're gonna be $15 million short this year...when is it going to end?" he said.

Miller said the recovery plan was only approved for four years. He believes the plan is flawed and Harrisburg will be forced to file for bankruptcy anyway in the near future. So, he proposed to file bankruptcy before Harrisburg's assets are sold in toxic deals.

He further explained that bankruptcy would be a viable option because union contracts would be reset. Miller said Harrisburg has not received needed concessions on the three union contracts, and bankruptcy would give the city negotiating power.

He said the federal protection would secure the parking garages, incinerator, and water and sewer assets.

"[Bankruptcy] will reduce our debt service to a point where we can manage," said Miller. "It will force us to come out of bankruptcy with a balanced budget."

On the flipside, Papenfuse is strongly against Miller's vision.

"Bankruptcy would be a disaster for Harrisburg," he said. "It could be a long, incredibly expensive process that would benefit lawyers more than anyone else."

Papenfuse, a business owner, believes knocking the recovery train off track this far into the process would ruin any progress already made.

"My belief is there is a solution in sight," he said. "We should take the opportunity to seize that solution and get about the process of turning the city around recovery."

Papenfuse believes that while the receiver's plan is not perfect, filing for bankruptcy would scare away business and economic development. He contends bankruptcy would cost taxpayers upwards of "hundreds of thousands" of dollars, or even more in legal fees.

When it comes to the future of Harrisburg finances, Papenfuse and Miller both said current city Finance Director Bob Kroboth should be fired.

"Bob Kroboth should be fired immediately," said Papenfuse. "We should be done with Bob Kroboth."

Dan Miller agreed.

"I was waiting to fire Bob Kroboth back when I was on City Council," he said. "In my experience, he was dishonest to me. He was dishonest to Council. He was incompetent."

Miller and Papenfuse said in light of recent fraud charges filed against Harrisburg by the Securities and Exchange Commission, they are dumbfounded why Kroboth has been able to keep his job.

According to abc27 records, Bob Kroboth said several times in 2011 he could not complete the 2009, 2010, 2011 audits because there was an issue of manpower.

Thompson responded to Miller and Papenfuse by standing up for Kroboth.

"I'm not going to stoop to that kind of petty level," she said. "It's sensationalization. Mr. Kroboth, like everyone else in this administration, is committed to getting this city back to fiscal solvency."

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