UPDATE 1-Voters oust mayor of Harrisburg, Pennsylvania in primary

Wed May 22, 2013 12:56am EDT

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By Michael Sadowski

May 21 (Reuters) - The embattled mayor of Pennsylvania's financially crippled capital of Harrisburg was ousted on Tuesday when she lost the Democratic primary to the owner of an independent bookstore.

Mayor Linda Thompson's loss to Eric Papenfuse comes after a tumultuous term in which her outbursts and statements caused a loss of confidence in her administration.

Papenfuse is likely to win the general election in this heavily Democratic city in November, but he must still face off against independent candidate Nevin Mindlin.

There were also more than 400 Republican write-in votes for a variety of candidates.

Papenfuse won with more than 38 percent of the nearly 6,500 votes. City Comptroller Dan Miller came in second with 32 percent, and Thompson trailed with about 28 percent. The remaining votes went to the other candidates.

Thompson once referred to Miller - Harrisburg's first openly gay elected official when he was on the City Council - as a "homosexual, evil little man," according to local media reports. In subsequent stories, she did not deny the comment.

In her concession speech Thompson said: "I don't feel this is a failure. I did the people's work over the last three-and-a-half years."

The central Pennsylvania city of nearly 50,000 became a poster child for municipal financial mismanagement because of a questionable 2007 bond deal to finance upgrades to the city's trash incinerator. The borrowing put Harrisburg on the hook for what is now at least $340 million in debt, though some reports peg the figure at $370 million.

Harrisburg faces a cumulative deficit of at least $13 million. It is struggling to pay for basic services and has had to skip at least $9 million in debt service payments.

After trying unsuccessfully in 2011 to file for bankruptcy, the city is under the financial control of state-appointed receiver William Lynch. Lynch is trying to sell or lease several city assets under a court-approved fiscal recovery plan.

It was under the former mayor of 28 years, Steve Reed, that the city inked the incinerator financing deal. Thompson ousted Reed in the fall of 2009.

Reed was also at the helm when the city misstated some information on financial disclosures, leading the U.S. Securities and Exchange Commission to charge the city with fraud earlier this month.

Problems with late financial disclosures allegedly continued once Thompson took over. No individuals were named in the case and the city made no payment under its settlement with the SEC.

Thompson has a strong base in the city's majority African-American population. But former staffers have said her aggressive style and controversial statements created a toxic atmosphere inside her office.

At a victory party in his Midtown Scholar Bookstore, Papenfuse addressed his supporters.

"Long work lies ahead of us, and with your help, Harrisburg's best days are ahead of it," he said.

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