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UPDATE 1-Pa. Governor Signs Harrisburg Takeover Bill

Thursday, 20 Oct 2011 09:39 AM

 

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Oct 20 (Reuters) - Pennsylvania Governor Tom Corbett signed legislation Thursday that allows for the takeover of the capital city of Harrisburg, according to the governor's spokeswoman Kelli Roberts.

The bill empowers the governor to declare a state of fiscal emergency in Harrisburg and petition for the appointment of a receiver. The receiver would be charged with drafting and implementing a long-term recovery plan.

"I remain a strong proponent for municipal governments tackling their own problems and coming together to develop a fiscal recovery plan when necessary," Corbett said in a statement. "But when that fails to happen, the state has to take action to ensure public safety.

In a bid to resolve its debt crisis, the Harrisburg City Council voted 4-3 on Oct. 11 to file for a Chapter 9 municipal bankruptcy.

The action immediately generated conflict between the City Council and the mayor, Linda Thompson, and the state legislature and the governor. All dispute the legality of the Council's action in filing for bankruptcy.

At a hearing on Monday, a U.S. bankruptcy judge declined to rule immediately on the legality of the bankruptcy filing and set a date of Nov. 23 to hear petitions on the matter.

On Thursday, Corbett signed the takeover bill in a private ceremony, Roberts said.

"The bill signed into law today will help to enforce Act 47 when municipalities fail to adopt a fiscal recovery plan, making it clear that if there is a failure to act, the state will intervene," Corbett added. "This legislation does not change the overall goal, and that goal is for distressed third-class cities to adopt and implement a fiscal recovery plan that will lead to solvency." (Reporting by Chip Barnett in New York; Editing by Theodore d'Afflisio)

© 2014 Thomson/Reuters. All rights reserved.

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