Harrisburg City Council finance chairman expresses support for debt repayment plan
Two key members of Harrisburg city council have affirmed their support for paying off the city’s debt with cash, rejecting a planned bond refinancing advocated by the mayor.
In Tuesday’s legislative session, Council President Wanda Williams and Ben Allatt, chairman of the Council’s Budget and Finance Committee, said they supported an alternative plan to use reserve funds to settle nearly $ 25 million in bond debt.
“It could be my exercise of separation in my role as chairman of the budget and finance to make sure we can write off this debt and make sure the city remains on solid footing going forward,” said Allatt, who plans to step down from the board in January.
According to Allatt, as of June 30, the city had savings of $ 37 million, which he said could pay off the city’s debt while leaving a healthy reserve fund balance of $ 11.8 million.
The city is also expected to receive $ 48.8 million from the federal American Rescue Plan Act. Allatt said a portion of those funds could be used to reimburse the city for eligible expenses related to COVID, freeing up additional money in the city’s budget.
Last week, Mayor Eric Papenfuse painted a very different picture, pointing to the superiority of his plan to refinance most of Harrisburg’s existing bond debt at a lower interest rate.
The refinancing, he said, would save the city some $ 10 million in interest payments over the life of the bonds, most of which are more than 20 years old and on which Harrisburg made. default during its financial crisis ten years ago.
Allatt agreed that the refinancing would save the city money compared to the 6.75% interest rate it currently pays on these bonds. However, he insisted that a better way forward is to pay off the debt all at once.
“We are not looting the general fund in such a catastrophic way to be able to meet this debt,” he said.
Papenfuse insisted last week that Harrisburg cannot fully repay its debt and maintain a reasonable fund balance. He could not be immediately reached for comment in response to Tuesday’s board meeting, which he did not attend.
Williams last week told TheBurg that she also supports debt repayment using city savings, a position she reiterated on Tuesday night. Williams also previously said that City Comptroller Charlie DeBrunner would make a presentation on the debt repayment plan at Tuesday’s meeting, but he did not.
Council members did not specify when or how they might proceed to repay the debt. Tuesday’s meeting was the last before their summer break. City council is not expected to resume operations for about seven weeks.
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