Rendell Starts State Bailout of Cities

Yesterday, Gov. Rendell announced a $4.3 million bailout for the city of Harrisburg. The city, following decades of wasteful spending on things like a Wild West Museum and owning a minor league baseball team; taking on functions best left to the private sector, like parking garages; and with massive debt on the ill-conceived incinerator, is facing bankruptcy.

Rendell’s brilliant strategy is to reward Harrisburg for its fiscal mismanagement — and set the stage for future state bailouts of cities facing similar struggles, but not quite to the degree of Harrisburg yet, like Philadelphia, Pittsburgh, and Allentown.

Mr. Rendell, who leaves office in January, said this might not be the last time the state has to help one of its major cities.

“There are things the legislature and the next governor will have to do to help cities, not only Harrisburg,” said Mr. Rendell, who pointed to recent financial difficulties in Philadelphia and Pittsburgh.

A spokesperson for the governor’s office said the decision to help Harrisburg make its debt payments does not constitute an implicit guarantee to other cities in the state and each situation would be decided case-by-case.

Of course, the state has plenty of money to bail out city governments — having itself been bailed out by the federal government twice in the last two years (indeed, about 10% of Pennsylvania’s General Fund budget comes from stimulus or FMAP funds approved by Congress).

Nothing to worry about though, because after mayors lobby the state for more money, and governors lobby Congress for more money, the federal government will just seek a bailout from an entity with an inexhaustible supply of funds — the American taxpayer.