Harrisburg’s near bankruptcy leads to financial reform bills

(Harrisburg) — A package of financial reform bills to be introduced in the state House and Senate were inspired by the near bankruptcy of Pennsylvania’s capital city.

The bills, dealing with how municipalities invest taxpayer money, stem from the early 2000’s, when the city of Harrisburg racked up more than 300 million dollars in debt to make repairs to the city’s incinerator.

State Senator Mike Folmer says much of that money was raised from risky investment tools known as swaps.

“These are interest rate management agreements where government entities enter into agreements with third parties to exchange or swap debt payments for cash.  The key is predicting whether interest rates will go up or down.  I don’t believe these swaps are an appropriate financial tool  for government entities and I think its wrong for government officials to be gambling with taxpayers money,” he said.

Folmer is co-sponsoring legislation to restrict the types of deals municipal officials can enter into, and require these deals be made public.