Trying To Save A Broke City
This is the second of two stories we're doing today about Harrisburg. Read the first story here.
Harrisburg is broke.
The Pennsylvania city is deep in debt. It's still spending more than it takes in. And, as David Unkovic described it to me last week, there's a cash-flow problem.
The governor of Pennsylvania decided Harrisburg can't manage its own finances, and appointed Unkovic as the city's receiver. Unkovic is supposed to be the solution to the city's financial woes. But he wouldn't put it that way.
He's a gentle, soft-spoken guy who's lived in Pennsylvania his whole life. And being the receiver for a broke town is a pretty lonely job.
"The unfortunate situation is there's simply not enough money to pay for everything," he says.
Last week, he decided to skip the city's regular debt payment so that the police and firefighters could get paid.
But the head of the firefighters union, Eric Jenkins, is still suing Unkovic, arguing that having a technocrat in charge of an American city is undemocratic. Nevin Mindlin, another plaintiff in the suit, says it isn't personal.
"Unkovic as a human being seems like a very decent soul," Mindlin says. Then he quotes Patrick Henry: "Suffer not thyself to be betrayed by a kiss."
Unkovic has to figure out what to sell off, who to pay, and who not to pay. The longer this takes, the harder it is for Harrisburg to clear its debts. New payments are coming due all the time.
Unkovic is pushing hard for cutting spending, selling off city assets, asking creditors for a break. He hopes that his plan will serve as a model to help out other struggling cities — in New York, California, Michigan.
But he also called Harrisburg a house of cards that's finally come tumbling down.
ROBERT SIEGEL, HOST:
Now, to Harrisburg, Pennsylvania, a city deep in debt. On today's MORNING EDITION, we heard about the main source of the problem, an incinerator the city built. Now, the man who is supposed to fix the problem. Here's NPR's Zoe Chace of Planet Money.
ZOE CHACE, BYLINE: It's easy to sum up Harrisburg's problem.
DAVID UNKOVIC: Lots of debt that it can't pay, expenses that exceed revenues every year. I mean, those are the main ones and the other one, of course, is cash flow.
CHACE: So that's the problem. The city is broke. The person who just laid it out, his name is Dave Unkovic. He is the solution, though he wouldn't say that. As the city's receiver, he makes the financial decisions for Harrisburg because the governor says the city is unable to manage itself. A gentle, soft-spoken guy who's lived in Pennsylvania his whole life, kind of a lonely job.
UNKOVIC: I have one assistant and me, so we're the smallest agency and there's two people.
CHACE: Unkovic has to make the calls. The state won't permit certain tax increases or bankruptcy court - at least, not yet. So here are the options. One, just don't pay some of the debt. Two, sell everything you can. Three, negotiate with the unions. Four, negotiate with the creditors. Unkovic is trying all of these. He's laid them out in a 200-page plan and now he's trying to get the people in Harrisburg on board. At meetings like this one at a bookstore downtown with the mayor on one side and a city councilwoman on the other, Unkovic's in the middle. Allen Shaffer from Harrisburg co-moderates.
There's the earnestly pragmatic suggestions from Karl Dunkleberger.
KARL DUNKLEBERGER: We'd ask that Mr. Unkovic consider not selling the water treatment plant because $10 gained today will lose $1,000 tomorrow.
CHACE: The single issue solutions from Ava Berg.
AVA BERG: Well, I believe in the three R's: the revenue remedy is reefer. And I have some information to back this up.
CHACE: But the reality of just not having enough money is summed up in this exchange right here. Here's Mayor Linda Thompson answering a question about police.
MAYOR LINDA THOMPSON: If I had the money, I would hire more police officers to make sure that we hire 25 a year, so the more money we get in, the more money will go to public safety and I'm not going to back down from that.
ALLEN SHAFFER: Thank you. Mr. Unkovic?
UNKOVIC: I don't have anything to add to that.
SHAFFER: Do we have the money?
UNKOVIC: Public safety is obviously the most important duty of government and, you know, one of the reasons why I decided not to make that general obligation bond payment today was because of that fact. So I do recognize that. The economic reality is that, in the long run, the city's revenues and expenditures have to match.
CHACE: Last week, Unkovic did decide to skip the city's regular debt payment so the police and firefighters could get paid, though the head of the Firefighters Union is suing, saying that having a technocrat in charge of an American city is totally undemocratic.
I met Eric Jenkins at the Keystone Diner in the city.
ERIC JENKINS: Yes. We have good benefits, but we damn well earn them. Everybody in this room is not open to running into a building that's burning. I am.
CHACE: You guys are going to have to take some cuts, right?
JENKINS: We'd have no problem. In our first meeting with this receiver, the first question I asked him is, what kind of numbers are you looking for?
CHACE: Jenkins says he came back with a plan that cut the firefighters even deeper. He says he's waiting to hear back.
Across the table from him at the diner is Nevin Mindlin, who's suing alongside Jenkins.
NEVIN MINDLIN: Unkovic as a human being is a very - he seems like a very decent soul, but I was telling Eric before you got here that Patrick Henry's line during the revolution was: Suffer not thyself to be betrayed by a kiss.
CHACE: Unkovic himself would appreciate the reference point. He loves American history and even derives comfort from how Lincoln managed the Civil War in thinking about how he's managing the different constituencies in Harrisburg.
The longer this takes, the harder it is for Harrisburg to clear its debts. New payments are coming all the time. He's pushing hard for the spending cuts, selling off city assets, asking creditors for a break. He hopes that this plan will serve as a model to help out other struggling cities, in New York, California, Michigan. But he also called Harrisburg a house of cards that's finally come tumbling down. He hopes to keep that house of cards out of bankruptcy court.
Zoe Chace, NPR News. Transcript provided by NPR, Copyright NPR.