"We still don't have money, and we still haven't moved one foot forward," Kim said.
Pennsylvania Governor Thomas Corbett, a Republican, doesn't support bankruptcy because "it's likely to adversely affect the credit rating of the county and surrounding municipalities," said a spokeswoman, Kelli Roberts, in a phone call today.
Evaluating Options
Asked if there would be a legal challenge, she said, "options are being evaluated." Noting the state law that was passed in June that barred Harrisburg from filing, she said, "it's an illegal act." How much in state aid can be withheld from the city isn't stated in the law, she said.
Although Harrisburg was officially in bankruptcy when it filed the Chapter 9 petition, whether it stays there is an open question. Unlike companies, whose Chapter 11 filings are rarely dismissed, a municipality can find itself tossed out of court.
Federal law lets states place restrictions on bankruptcy filings by municipalities. As a result, the Bankruptcy Code calls for the judge to entertain objections.
If an objector shows that the filing wasn't authorized under state law, the bankruptcy court dismisses the petition.
A state law bars Harrisburg from filing until July 2012. Of the 629 Chapter 9 filings since 1937, 161 cases have been dismissed or their plans haven't been confirmed, Spiotto said.
Bankruptcy won't provide revenue the city needs, Spiotto said in a phone call today. "Working with the state, as they've seen, provides more funds for them," he said.
One Way Out
Richard Lehmann, publisher of the Distressed Debt Securities Newsletter in Miami Lakes, Florida, said the council's action is rational.