City of Harrisburg Won’t Make Its September GO Bond Payment?

Updated from previous version with addition of response from the Office of Harrisburg Receiver.

During her press conference yesterday in response to City Controller Dan Miller’s statement, Mayor Linda Thompson announced that Harrisburg Receiver William Lynch has made the decision not to make the City’s general obligation bond payment in September. The payment of $3.93 million will be skipped in order to give the City a greater cash flow to make operational expenditures such as payroll.

In the video below, the Mayor gives her interpretation of how the math works to determine the actual structural budget deficit the City of Harrisburg will experience at the end of the year. The City Controller is claiming a $13.6 million deficit, the Office of the Receiver projects a $12.6 million deficit, and the Harrisburg Mayor declares the deficit will only be $3.4 million.

Roxbury News–“Mayor Thompson______Miller’s jacking up the numbers”

In March, former Receiver David Unkovic had decided not to make the City’s March general obligation bond payment  of $5.3 million. The bond insurer of the City general obligation bonds, AMBAC Assurance, made the payment to bondholders, there by becoming part of the list of City creditors.

Bloomberg 3/16/2012–“Pennsylvania’s Harrisburg Debt Grows As Ambac Joins List”

In response to the question: With the Mayor’s proclamation, is the Receiver able to confirm he has indeed made the decision to skip the GO bond payment? the Receiver’s spokesperson, Cory Angel, replied, “Many suppose the bond payment will not be made because of the structural deficit.  But the receiver has not yet made an official determination.” Angel indicated that the Receiver would be making that announcement soon. The $3.93 payment is due September 15th.