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Harrisburg, Penn., audit details 2009 financial meltdown
July 25, 2012 / 5:15 PM / 5 years ago

Harrisburg, Penn., audit details 2009 financial meltdown

July 25 (Reuters) - The mayor of Pennsylvania’s distressed capital city Harrisburg on Wednesday released a long-delayed audit that sheds light on the collapse of the city’s finances and points the finger at the previous mayor.

The fiscal 2009 audit reveals that the city ended the year with a $227 million deficit, when it had closed out 2008 with a surplus of $46 million.

“It was the year in which the proverbial ‘chickens came home to roost,'” wrote Mayor Linda Thompson, in the introduction to the audit. She took office in 2010 after her predecessor, Stephen Reed, who held the position since 1982.

During Reed’s time in office, the city decided to guarantee debt that would pay for repairs to its waste-to-energy trash incinerator. But even then, the facility wasn’t generating enough revenue to cover its existing debt, according to a separate forensic investigation released in January.

That made the new borrowing and bond guarantee for the incinerator a double-down bet that has mired the city in what is now about $320 million of debt.

Harrisburg now has a state-appointed receiver, who is working to sell the incinerator and other key assets.

Thompson referred in the audit to the “incompetency” surrounding the incinerator debt deals and said Reed’s time in office was filled with “years of misinformation.”

Reed could not immediately be reached for comment on Wednesday. (Reporting By Hilary Russ; editing by M.D. Golan)

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