Harrisburg faces a $12.6 million year-end budget deficit and could run out of cash to pay employees by the end of September, said state official Fred Reddig.

Reddig gave a city financial recovery update to Harrisburg Receiver William Lynch and the city's Municipal Financial Recovery Advisory Committee this morning.

Harrisburg has enough cash to pay bills and employees through September and may have to skip a general obligation debt payment of $3.4 million next month to continue meeting payroll.

The receiver's office soon will decide whether it will skip the next debt payment due Sept. 15, Reddig said.

The receiver's office directed Harrisburg officials to skip a prior $5.3 general obligation debt payment in March to shore up the city's budget.

Harrisburg has hired a public works director and an assistant city solicitor, but Lynch, who will square off with council in court tomorrow over a tax issue, would not disclose who the city hired. Lynch has asked the Commonwealth Court to force council to adopt a 1 percent income tax increase for city residents.

Robert Philbin, spokesman for Linda Thompson, said he didn't immediately know the names of the hires or how much they will earn annually. The new public works director starts Monday.

City officials also hired a senior accountant, but the candidate turned down the position because of Harrisburg's residency requirement that would force them to live in the city, Reddig said.

Reddig also said the state has given the city its annual $2.6 million for fire protection services and that Harrisburg's late 2010 and 2011 audits are on pace to be completed by the end of the year.