The appointment of a fiscal overseer came more than a month after Gov. Tom Corbett signed a bill amending state law to force the implementation of a recovery plan when third-class distressed cities fail to do so under the Act 47 program.
Several failed attempts by city officials to reach a consensus over a plan for the cash-strapped created the change. Harrisburg remains the only Pennsylvania municipality in Act 47 that has gone into receivership.
With the law change, Harrisburg has been painted as being one where the state has full authority and officials have no power or say in what becomes of its future. However, Mayor Linda Thompson contends that her role hasn't changed.
"I'm the chief executive officer of the city, and I have always been central to moving the plan forward," she said in a meeting Monday with the Business Journal.
Cory Angell, a spokesman for city receiver William Lynch, agreed. While the mayor is "operating in a different environment" these days, she remains an integral part of the recovery process, he said.
"It's not our position to execute without input," Angell said. "That's not the way we're going to operate. But if it comes down to nobody can make a decision then somebody has to. That's been our whole problem."
He paints the relationship with the mayor as one of cooperation in moving forward on initiatives in the court-approved recovery plan originally drafted by David Unkovic, the city's first receiver.
"I think it's the receiver's job to lead the recovery plan. The mayor and the City Council are still the governing bodies," Angell said.
However, with the receiver and the council about to enter the Commonwealth Court to battle over raising the city's earned income tax, or EIT — one part of the recovery plan — Angell was quick to note the impediments along the way, including the council.
"It's the last-minute attempt to try to regain what they gave up," Thompson said about the council.
"They want to cherry pick which parts they want to implement and which they don't," Angell said. "We still want to foster an environment where it's more collegial. It can become impossible when others don't want to foster that environment."
In the process of the council hiring a new crop of attorneys to represent it in its upcoming legal fight, Councilor Susan Brown-Wilson compared the commonwealth to a dictatorship.
"I thought we lived in a democracy where we sit down and discuss things," she said Monday.
The Business Journal sat down and talked with Thompson about her role in the ongoing recovery process, the prospect of going back down the road to bankruptcy and economic development initiatives.
The mayor has resurrected a business advisory council started in 2010 to potentially streamline the city's Department of Building and Housing Development and come up with ways to infuse business growth.
Q: At this point in the recovery process, how do you see your role and can you describe the working relationship with the office of the receiver?
A: It hasn't changed. I'm still central to moving the plan forward.
My relationship with the first receiver, David Unkovic, and now Gen. Lynch has been nothing but a professional one (with) a spirit of cooperation. There are times when there is a need for me to express my concern about certain matters. It's well received and respected.
While we have to make some tough decisions, and they may be painstaking for us in the city of Harrisburg, including myself, they are necessary decisions. The quicker we can make these decisions and get on with moving the city forward, the lesser of the pain that the tax(payers) (will) have to pay.
Do city officials still have a voice for the taxpayers?
I still make decisions. I still determine if a person is not properly performing, I still have firing power. They can't stop me. When it comes to disciplining employees for whatever reason, I still discipline.
When it comes to contracting out work for the city of Harrisburg, I still contract out. I still have a lot of my authority. I have not lost a lot of authority. When it comes to knowing the (request for proposal) process for the leasing of the parking (garages), I've been at the table knowing what's happening. I haven't been left in the dark. I haven't been sidelined.
I bring a lot to the table. I have a lot of institutional knowledge. With that, I bring a great deal of wisdom and added value to the team.
With regard to the legislation that the governor put in place, particularly the one that calls for an emergency financial plan, I guess sometimes (there is) frustration that comes along with that. I got to send everything over to them, whereas before I could just make the decisions.
But, even with that, when I give justification for the need of an urgency and expedient decision from them, it's given. For example, I have 50 vacant positions in the city of Harrisburg right now that I can't fill. And that's because we have this huge structural deficit.
Over the last three years, the solution we've used is to delay hiring and, at the same time, freeze vacant positions. Some of those positions can no longer be frozen because they're beginning to jeopardize the health and welfare and safety of the citizens.
For instance, one of our positions came open in building and housing. It was the zoning officer position. That's a critical position, particularly when it comes to economic development, and we have a lot of plans that need immediate attention.
That's just one example. It's not as restrictive as it appears.
As far as City Council members, they gave their power away a long time ago, unfortunately.
There are just some things that are necessary, and the EIT is not a matter of putting all the onerous on the taxpayers. My voice has been at the table defending the position that the shared pain must be equally distributed among all creditors. That includes (Dauphin County), (Assured Guaranty Municipal Corp.), the unions and the taxpayers.
(The council) gave their power up all under the guise of standing up for the taxpayers. And now they don't have a voice at the table of making any decisions.
Where do you see this city's finances and reputation if all plan objectives are executed?
I started this motto in 2010: I said, "The city is open for business." And the city has been open for business ever since, and we're still doing business.
I'm proud to say, to date, we've had 1,206 business (licenses) that were issued. Out of that, we've been able to generate over $127 million in (construction and related stimulus within the city), as a result of people understanding the city is still open for business. That's since 2010.
You have said bankruptcy needs to be the last resort for this city. But the longer this drags out and court battles linger over the plan, isn't it likely that will happen?
Bankruptcy should never be the first step. It's always the second step. (It's) the last option when everything else has failed.
We are not bashful about saying we have some serious financial challenges ahead. All hands (need to be) on deck so we can really take care of this city with the kind of gloves that we need to in order to save this city.
You have proposed a new tax abatement program for the city. What are your expectations for that economic development effort?
We sent tax abatement down to the City Council in 2010, and they let it die in committee. I just sent down another revised one, and it's sitting in committee.
It hasn't given me a long line of businessmen who are on the outside looking in, wondering if they should do business in the city. There is no tax-abatement incentive.
However, there are other tax credits available to aid the city and other municipalities. That's coming from the state. You have the Keystone Innovation (Zone) tax credits, Enterprise Zone tax credits and now education tax credits.
(The) council has really halted new construction. There has been no new construction. The abatement program expired in 2010.
(The) council continues to cry that they are fighting for the people. I have a lot of people out here who need jobs. With those (business licenses), 664 jobs were created.
When you got the majority of city residents who have to go outside to find decent sustainable wages — when you have this kind of stalemate happening to give businesses incentives to do business and hire — (the) council's statement of defending the taxpayers is worthless. They are not even aiding and helping create jobs.