Nov 14, 2012 3 min read

HARRISBURG – The former financial custodian for Pennsylvania’s cash-strapped capital says the state Legislature should appoint an independent prosecutor to examine how Harrisburg’s finances became so badly bungled if state or federal authorities do not investigate.

Last spring, then-Harrisburg receiver David Unkovic asked the state attorney general’s office and the U.S. attorney in Harrisburg to look into the city’s financial mess, but neither has said whether an investigation is under way.

Before a Senate panel Tuesday, Unkovic again criticized the financing for an incinerator, which is at the heart of the city’s financial mess. Unkovic said it “stinks like a kettle of rotten fish. … Nothing sticks together,” and he called for a criminal investigation, the Patriot-News of Harrisburg reported.

“What can be more important for an attorney general to do than investigate how the finances of the state capital got ruined?” Unkovic asked the state Senate Local Government Committee during its second hearing on Harrisburg’s finances.

Meanwhile, Fred Reddig, a state official acting as adviser to the city’s receiver, said Wednesday that Harrisburg could run out of money to pay its employees by mid-December, the paper reported. Reddig said the city may have to put off payment of some bills or ask for an advance payment from the sale or lease of city assets.

The city has faced a payroll crunch before and managed by foregoing payments on general obligation bonds or getting an advance from the state on aid due later in the year.

The Senate committee testimony has been focused on the manner in which Harrisburg accumulated the $300 million debt tied to the renovation of the aging and polluting city-owned municipal trash incinerator renovation. The panel is not looking to assign blame, but rather to change state laws so that a similar financial fiasco does not befall other municipalities.

Unkovic, a municipal bond lawyer, was appointed by Gov. Tom Corbett last year. He resigned in March, citing “political and ethical crosswinds” that he said made it impossible for him to continue in the job.

But before leaving the post, he said that he was disturbed by bond documents he reviewed following last year’s state takeover of Harrisburg and that he sent letters to the attorney general’s office and the U.S. attorney’s office in Harrisburg asking for an investigation. Officials from those offices have not said whether they’ve received Unkovic’s letter or whether they are investigating.

A January audit commissioned by the city authority that owns the incinerator said hired professionals bypassed due diligence to press forward with financing for the incinerator’s renovation. The audit concluded that, in some cases, city and county officials took “strained positions” on state municipal debt financing law to allow the retrofit to proceed.

Many who testified before the panel blamed the original contractor, the Patriot-News reported. Jeffrey Haste, chairman of the Dauphin County commissioners, said the project was plagued by “poor execution and lax oversight.”