Ron B. from Collier raises an interesting point in a letter to the editor published in Tuesday’s PG. He says that if a private company faced the same problems as the Port Authority, it would file for bankruptcy to either reorganize or liquidate.

The federal Bankruptcy Code has a special place — Chapter 9 — just for government entities that get into financial trouble. An Allegheny County Councilman suggested last month holding a referendum to give the county the power to direct the Port Authority to file for Chapter 9 and put itself out of business. But first, the state would have to grant the Port Authority the ability to file for bankruptcy and Harrisburg has not seen fit to do so.

What would a Port Authority bankruptcy mean? One big effect would be to void the existing contracts, including the transit unions. That’s why the ability to file for bankruptcy is such a powerful tool for struggling private-sector companies. A union would have a lot more motivation to sit down and genuinely discuss the kind of concessions that are necessary for a company to survive when the alternative is that a bankruptcy court judge will toss out the entire contract.

But at the moment, that’s not an option for the Port Authority. Instead, state law permits the transit union to continue to work under the terms of the contract that expired on June 30 for as long as it wants.

Posted by: Ken Zapinski

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