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Instead of Accepting Stimulus Money, Pennsylvania Town Declares Bankruptcy

Waste Fuels Energy Production In Incinerator Plant
(Photo by Sean Gallup/Getty Images)

The capital city of Harrisburg PA has chosen to file for bankruptcy, rather than allow a state takeover, or other governmental intervention.

The City Council voted 4-3 to declare Chapter 9 bankruptcy protection after it was announced the city is facing a debt burden five times larger than it’s annual operating budget. The cause of the debt, according to Bloomberg Financial Times, is recent overhaul and refurbishment of a trash-to-energy incinerator that according to city officials, is not generating enough revenue.  Some city council members voted no, saying that under Pennsylvania law, third-class cities are not allowed to file bankruptcy; they also claim by doing so, the city does not have enough money to pay for litigation that will certainly follow.  No specific details were released, but Councilwoman Susan Brown-Wilson, who voted yes, says Chapter 9 is better than the proposed recovery plan.   The bulk of the debt stems from the waste-to-energy plant that is not generating enough revenue to offset millions spent on the facility.

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