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How A Mismanaged Incinerator Deal Bankrupted Harrisburg, Pennsylvania

You may have heard that Harrisburg, Pennsylvania has filed for bankruptcy. Certainly I did, and kind of shrugged at the headlines figuring it was one of those things that happens during a severe recession. The real story of the bankruptcy, as told by the pseudonymous Bond Girl, is actually quite interesting. It turns out, among other things, that “[t]he vast majority of Harrisburg’s bonded indebtedness stems from improvements made to the city’s trash incinerator plant” rather than from some larger mismanagement.

Something this reminds me of is that you often hear the sentimental notion advanced that smaller government units are “closer to the people” and somehow better run than the out-of-touch regime inside the Beltway. The truth generally seems to me to be the reverse. State legislators and city council members are worse-informed and worse-staffed than members of Congress, their conduct receives less media scrutiny, and voters are less informed about municipal issues. The federal government has involved itself in a fair number of boondoggles, to be sure, but I’m pretty confident that no mismanagement of comparable relative scale would be remotely possible in a federal government armed with CBO and OMB analysis, an aggressive press corps, and all the rest.

Update:

Here’s a great Bloomberg segment on the legal battles around this bankruptcy filing. There’s apparently a good chance that the whole thing will get tossed out in court.

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