In what appears to be the first state capital to toss up its hands and cry 'mama', Harrisburg, Pennsylvania has officially voted to declare bankruptcy.
We are confident the spinmasters will spin the first major domino in the muni crisis as bullish: after all it "removes uncertainty." Bloomberg reports that "The city of Harrisburg, Pennsylvania, facing a state takeover of its finances, filed for bankruptcy protection following a vote by the City Council, according to a lawyer for the council.Mark D. Schwartz, a Bryn Mawr, Pennsylvania-based lawyer and a former public finance banker for Prudential Financial Inc., said he filed the documents by fax to a federal bankruptcy court last night. The filing couldn’t be confirmed with the U.S. Bankruptcy Court in Harrisburg.The state capital of 49,500 faces a debt burden five times its general-fund budget because of an overhaul and expansion of a trash-to-energy incinerator that doesn’t generate enough revenue. “This was a last resort,’’ Schwartz said in an interview after the council voted 4-3 to seek bankruptcy protection. – Bloomberg via Zerohedge
While everyone was watching for cities in Alabama to be the first major bankrupt municipality, Harrisburg swooped in last night and would not be denied the opportunity.
Look for more riots, flash mobs, and violence to continue in the state.