Saga of $300 million Harrisburg incinerator becomes cautionary tale

Lawmakers are looking into what they call “fiscal debacle” of Harrisburg’s incinerator, with an eye toward preventing similar cases of irresponsible borrowing that could doom other municipalities across Pennsylvania.

 

 

The incinerator is worth a small fraction of the more than $300 million borrowed to fund it over the past two decades.

Lawmakers referred to it as a unique situation, but state Sen. John Blake, D-Lackawanna, warns it could be the tip of the iceberg.

“The scale of this situation is probably unique. But I don’t think it is distinct only to the city of Harrisburg,” he said. “I think this is a more pervasive issue throughout the entire commonwealth that affects the fiscal health of all our communities.”

Lawyers with the state who are tasked with approving municipal debt issuances say they’re ill-equipped to catch misleading financial statements.

The author of a forensic audit of the incinerator’s financing says his investigation yielded a number of red flags about the project’s accumulation of debt that should have alerted people involved to put a stop to the borrowing.

The city’s former mayor, Stephen Reed, says the debt issuances snowballed because the cost of the incinerator was underestimated from the beginning, and he wanted to complete the project so it could be used.

A second hearing is scheduled on Oct. 29 as lawmakers look to fashion a legislative response to prevent a similar issue.