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Harrisburg Mayor Linda Thompson said yesterday that she will fight for the city's ability to declare bankruptcy after June 30, Reuters reported yesterday. A state law that bars small Pennsylvania cities from filing for municipal bankruptcy is to expire at the end of June. That law led a bankruptcy judge in November to reject a filing by Harrisburg, the capital city. Municipal officials are following a state receiver's fiscal recovery plan in an effort to deal with at least $320 million of debt stemming from repairs to its trash incinerator. However, Thompson said that she will oppose any attempt to extend or reintroduce the bankruptcy ban. "We should reserve the right to petition for bankruptcy protection," Thompson said.

Providence Mayor Angel Taveras reached a tentative accord with union leaders and retirees that cuts pensions for workers including police and firefighters and prevents bankruptcy for the Rhode Island capital, Bloomberg News reported today. Providence needs almost $1 billion to fulfill its contract promises after failing to make required contributions to its retirement system. The agreement was reached a month after Taveras signed an ordinance mandating similar changes, prompting threats of lawsuits from unions and retirees. Opponents said the cuts would break labor contracts. The accord needs to be formally approved by union members and retired workers as well as the City Council, the mayor said. Under the agreement, the city would suspend annual cost-of-living adjustments for current and future retirees for the next decade, Taveras said. It would also permanently end 5 percent and 6 percent annual increases given to about 600 former firefighters and police, and cap all future pensions at 1.5 times the state's median annual household income, or almost $82,400.

County legislators for Alabama's bankrupt Jefferson County voted unanimously yesterday to skip a $15 million payment due Oct. 1 on about $200 million of Jefferson County general obligation warrants, Reuters reported. The cash-strapped county declared bankruptcy in November with slightly more than $4 billion in debt, which is the largest municipal bankruptcy in U.S. history. Last month, Jefferson County skipped - for the first time - a $15 million general obligation bond payment as officials said that they needed the money to pay for basic government services. Last week, Alabama state legislators turned aside a campaign to restore a local jobs tax that would have provided $60 million in revenue - a loss that county commissioners said will require more sharp cuts in Jefferson County's spending.

Robert G. Flanders Jr., the receiver appointed by Rhode Island to fix the finances of the town of Central Falls, warned the bankruptcy judge presiding over its chapter 9 bankruptcy case that the federal court would violate the state's sovereignty if it removes Flanders from power, Dow Jones DBR Small Cap reported today. Under attack from city councilors who recently asked Judge Frank Bailey to give them back control of the city's finances, Flanders argued that a federal court does not have the power to undo the state action that put him in charge of the Providence suburb of 19,000.

Stockton, Calif., and its creditors have agreed to extend a mediation period intended to help the city avoid having to file for bankruptcy, Reuters reported yesterday. The two sides will enter into a 30-day extension of talks through June 25 as the end of their 60-day confidential mediation period is drawing to a close. "Our creditors understand our fiscal circumstances and indicates that they believe that it is worth the investment of time and resources to work toward a solution," Stockton Mayor Ann Johnston said. Johnston last week said that city officials are hopeful they can avoid a municipal bankruptcy filing for Stockton, the first big city in California to test a new law requiring pre-bankruptcy mediation after its leaders in February endorsed a restructuring plan for the city's finances.

Stockton, Calif. officials are hopeful of a settlement with their financially troubled city's creditors to avoid a municipal bankruptcy filing, Mayor Ann Johnston said after the city manager projected a larger city budget gap, Reuters reported yesterday. Mediation between Stockton and its creditors could wrap up at the end of this month unless a majority of the parties in the talks request an extension. Stockton is the first big city in California to test a new law requiring mediation after its leaders in February endorsed a restructuring plan for the city's finances. The law requiring mediation was approved in response to Vallejo, California's controversial bankruptcy filing in 2008. Stockton's restructuring plan includes mediation and, to the shock of many in the U.S. municipal debt market, defaulting on some debt payments during the remainder of the current fiscal year through June.

Alabama's bankrupt Jefferson County and creditors owed $4.23 billion will spend at least an extra year battling in court, the county's lead bankruptcy lawyer said, because state lawmakers killed a bill providing the county with much needed revenue, Reuters reported yesterday. Alabama's House lawmakers on Wednesday skipped a vote on a bill that would have restored Jefferson County's occupational tax, effectively preventing enactment of a local tax worth $60 million annually to the county for a second year in a row. "The state legislature doesn't realize the severity of its inaction," Kenneth Klee, the county's top bankruptcy lawyer, yesterday told a meeting of the Jefferson County Commission. "It will add at least a year to the bankruptcy proceedings." No timetable exists for negotiating a workout plan with creditors and ending the case, filed on Nov. 9, but analysts have said that the complex proceedings, involving financial giants such as JPMorgan Chase and local suppliers, could run for years.

Alabama state lawmakers yesterday spurned a bid by bankrupt Jefferson County to restore a local jobs tax that county leaders say is needed to pay Wall Street banks that are owed $4.23 billion, Reuters reported yesterday. The jobs tax is estimated to bring about $60 million in yearly revenue to Alabama's most populous county, which in 2011 filed the largest U.S. municipal bankruptcy case. Without the revenue, Jefferson County officials may have to cut more government staff and default on a $10 million general-obligation warrant payment due Oct. 1.

Harrisburg, Pa.'s city council members cannot challenge the dismissal of the city's bankruptcy, an appeals court ruled yesterday, Bloomberg News reported. The U.S. Court of Appeals in Philadelphia granted a request by Harrisburg's mayor and the County of Dauphin to block the councilors attempt to appeal. The mayor, the county and the state of Pennsylvania opposed the bankruptcy when it was filed by a majority of the council in October. Bankruptcy Judge Mary D. France dismissed the bankruptcy on Nov. 23, saying that it was not authorized by state law. She later refused to let the council's attorney, Mark Schwartz, challenge her ruling, saying that he waited too long. Her decision was upheld by U.S. District Judge Sylvia H. Rambo, who called the effort to appeal to district court "potentially frivolous."

Elected officials of Harrisburg, Pa., asked a judge to suspend the state’s takeover of city finances until a court investigates the resignation of former receiver David Unkovic, Bloomberg News reported yesterday. Three officials who have opposed efforts by the city's mayor and the state to restructure Harrisburg's finances asked the judge overseeing the receivership to halt any work by Governor Tom Corbett (R) related to the takeover, according to a document provided by Mark Schwartz, the officials' lawyer. Unkovic sent a handwritten letter to the court in March, saying that he was quitting because of his "untenable position in the political and ethical crosswinds." Steven Kratz, a spokesman for Pennsylvania's economic development department, said that the state intends to nominate a replacement for Unkovic.