Pennsylvania's financially troubled capital city is trying to avoid layoffs as it misses more debt payments amid political bickering over how to repair the damage.

Observers say a feud between Harrisburg's mayor and city council is stalling plans to pay off a costly trash incinerator renovation and resolve a budget deficit.

Now, the city is taking the rare step of skipping a general obligation bond payment due Sept. 15 as an alternative to laying off city employees, firefighters and police officers.

Normally, the default rate is very low on the bonds that help municipalities pay up front for roads, buildings and other projects.

Gov. Ed Rendell has declined to bail out Harrisburg. Meanwhile, council members are debating a bankruptcy filing, while the city could face a lawsuit seeking a court order to pay up.