Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Aid plan helps Pa. capital avoid default

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- The state of Pennsylvania is helping the beleaguered capital city of Harrisburg stave off default with a multi-million dollar cash injection, temporarily postponing the specter of bankruptcy.

Gov. Edward Rendell said Sunday he would provide $4.3 million to Harrisburg. This includes expedited payments of $1 million in fire protection and $2.6 million for an annual payment to the municipal pension assistance fund.

It also includes $850,000 to hire a financial management firm, Scott Balice Strategies, "to develop a comprehensive plan for the city's financial stability and a $500,000 loan "to be repaid when the city's financial situation improves," according to a press release from the governor.

Without this assistance, the cash-strapped city was in danger of defaulting on its $3.29 million payment to bondholders on Wednesday. The city had issued those bonds to build a trash plant.

In May, Moody's knocked the city's rating on its general-obligation bonds three notched down to "B2," five steps below investment grade. To top of page

Search for Jobs

Index Last Change % Change
Dow 19,804.72 -22.05 -0.11%
Nasdaq 5,555.66 16.93 0.31%
S&P 500 2,271.89 4.00 0.18%
Treasuries 2.39 0.06 2.66%
Data as of 11:41pm ET
Company Price Change % Change
Bank of America Corp... 22.63 0.58 2.63%
Ford Motor Co 12.41 0.00 0.00%
Chesapeake Energy Co... 6.98 -0.03 -0.43%
Citigroup Inc 57.39 -0.99 -1.70%
Reynolds American In... 58.00 0.32 0.55%
Data as of 4:01pm ET
Sponsors

Sections

Irish drug maker Mallinckrodt will have to pay a $100 million fine and allow one of its competitors to produce a life-saving medication used to treat infants. The company hiked the price of the drug from $40 per vial to more than $34,000 per vial over the course of about 15 years. More

Federal Reserve Chair Janet Yellen gave her outlook on monetary policy days before Donald Trump becomes president. More

Navient, formerly part of Sallie Mae, was sued by the CFPB Wednesday for allegedly cheating borrowers out of repayment rights. More