Harrisburg’s inability to pay off massive debts accumulated by years of wasteful spending made headlines in the Wall Street Journal. Last week, Harrisburg skipped a $3 million debt payment on the incinerator. The missed payment sent vibrations throughout the market, as investors question the stability of municipal bonds.
“So far, the market consensus is … Harrisburg won’t be the “first domino” that sets off a collapse, said Matt Fabian, managing director at Municipal Market Advisors. He cited among other things the city’s “eroding financial and political situations.”
In Pennsylvania alone, over 25 cities have been in financial distress since 1987, and the Secretary of DCED, George Cornelius, has predicted all mid-size and large cities in Pennsylvania will likely enter financial distress in the coming years.
State and local governments should heed the current predicament of Harrisburg and start reducing the massive amounts of taxpayer debt they carry, now about $9,600 for every Pennsylvanian, and stop out-of-control spending.