Daniel Shanken/Reuters file
The Pennsylvania State Capitol Building as seen from State Street in Harrisburg, Pa., which in a desperate bid to resolve its debt crisis attempted to file for bankruptcy. A federal judge on Wednesday would not allow the filing.
Harrisburg, Pa., cannot file for bankruptcy to get out of its $300 million debt, a federal judge ruled Wednesday.
The ruling paves the way for a state takeover of finances of the Susquehanna River city of 50,000.
The city in October became one of the most-high-profile cities to opt for the little used Chapter 9 of the U.S. bankruptcy code, most notably tapped nearly 20 years ago by Orange County, California.
But for Harrisburg, state law prevents authorization for using the Chapter 9, U.S. Bankruptcy Court Judge Mary France said in Wednesday's ruling.
"We are certainly disappointed at the judge's ruling and while we respect her opinions we will take some time after Thanksgiving to determine whether we want to file an appeal," said Brad Koplinski, a city councilman who voted for bankruptcy.
"We still believe that bankruptcy is the best option for the taxpayers of Harrisburg."
Mark Schwartz, a Philadelphia-based attorney who represents the city council members who voted in favor of a filing, said he is "leaning" toward filing an appeal, but has not decided yet.
The Pennsylvania capital's crisis has been a year in the making.
The city's debt is tied to its nearly 40-year-old trash incinerator. Beset by environmental problems and fines for years, U.S. Environmental Protection Agency shut it down in 2003 with about $100 million in debt already piled on it, some of which had gone to finance other city projects.
The filing was seen as a barometer for other municipalities seeking potentially to tap this option to deal with mounting debts.
Jefferson County, Alabama, earlier this month filed a $3 billion Chapter 9 petition, the largest U.S. municipal bankruptcy in history.
The Associated Press and Reuters contributed to this report.