Some of course corrections called for by Attorney General Josh Shapiro Thursday in his final report on the Harrisburg debt crisis have a running start in the Pennsylvania General Assembly.
A comprehensive package of municipal debt reform bills was drafted last session and passed by the state Senate before running headlong into the 2016 election cycle and, therefore, out of time for votes in the House.
The four-bill package -- the product of a legislative investigation into Harrisburg's plight -- was re-introduced in January, has been referred to the Senate's Local Government Committee, and now has a fresh two years to make the trip to Gov. Tom Wolf's desk.
Other recommendations from the grand jury report -- intended to give law enforcement more tools to root out public corruption -- will have to start from square one.
Shapiro, for example, called for extending the statute of limitations for crimes committed by elected officials and public employees, especially in cases where the conduct isn't discovered until after an official or employee leaves office.
Most of the public corruption charges levied against former Harrisburg Mayor Stephen R. Reed were dismissed last year when Judge Kevin Hess ruled they needed to be filed within five years of Reed's leaving office.
Shapiro also asked the legislature to give his office jurisdiction to investigate public corruption in county and municipal government.
At present, the attorney general has latitude to take up public corruption cases against state officials, but the office can only look at local officials after a referral from a district attorney. Original jurisdiction, Shapiro said, could help avoid delays that can sometimes make or break cases.
In the Harrisburg case, he said, it "would have given this office the opportunity to jump in almost immediately... while the trail was warm, while the papers were available, while witnesses were available and where we might have been able to dig deeper than we otherwise were able to."
Here's a look at major elements of the debt reform package -- many of which dovetail with the AG's report -- that made it through the Senate on a series of 50-0 votes last fall.
They would:
- Require that a performance bond or equivalent security cover 100 percent of the construction cost for any major public works project entered into by local government entities.
This was high on Shapiro's list of reforms.
Lack of a performance bond caused major issues for Harrisburg's incinerator project when the contractor hired for a major upgrade in 2003 couldn't complete the project, forcing the Harrisburg Authority into subsequent borrowings both to finish the original project, and to make additional fixes when it failed to work.
- Prohibit one government body from charging a fee to another to provide a guarantee of bonds, something both the City of Harrisburg and Dauphin County did regularly in exchange for backing Harrisburg Authority loans on its incinerator upgrades.
Cross-government guarantees could still be extended to solidify a borrowing; but the guarantor would no longer be able to use its backing as a money-maker, thereby driving up the overall costs of the borrowing.
- Seek to build more transparency throughout the bond process, including clarifications that any proceeds from bond issues or similar borrowings can only be used for the original, specified purposes.
This was also a problem in Harrisburg, state prosecutors allege, when fees charged by the Harrisburg authority were used to support former Mayor Stephen Reed's agenda of economic development projects.
- Clarify that no borrowing can include more than one year of "working capital" -- funds meant to keep certain revenue-generating enterprises afloat through its start-up period.
This change is intended to prevent repeat refinancings on bad projects that show little chance of becoming self-sufficient.
- Beef up state review of local government borrowings by requiring filings with the state Department of Community and Economic Development prior to, instead of after, final votes by local officials.
Shapiro, in his report, also suggested giving DCED stronger review authority.
- Create new enforcement provisions for willful violations of the state's debt act, and extend provisions of the state Ethics Act that create a two-year ban on companies from hiring certain state officials they work with to municipal officials and employees authorities to the list of public officials covered by the state's Ethics Act.
Taken together, the measures are designed to prevent a repeat of the problems created by Reed's aggressive use of bond financing for pet projects and budgetary needs.
eed's actions, executed by municipal authorities that effectively served as rubber stamps for most of his 28 years in office, ultimately left Harrisburg facing a $300 million-plus debt load that forced the capitol city into state oversight.
As Sen. John Eichelberger, R-Blair County, who helped steer the package to the Senate floor in his role as former chair of the Local Government Committee, put it then:
"It was bad practice (in Harrisburg), it was done by people who are still operating in Pennsylvania, and we've got to make sure that something like this doesn't happen anywhere else again."
