By David DeKok

HARRISBURG, Pa. (Reuters) - One Pennsylvania city's controversial attempts to gain more power over immigration enforcement could push that city into state fiscal oversight if it loses a ruling over legal fees.

Hazleton in 2006 banned landlords from renting to illegal immigrants and employers from hiring them. The city's law was copied by other U.S. cities, including Escondido, California, Valley Park, Missouri, and Riverside, New Jersey.

But Hazleton's ordinances, which were never implemented, were struck down repeatedly in court.

Now, the city is waiting on a ruling from a judge who could force the city to pay $2.8 million in legal fees to the American Civil Liberties Union (ACLU) and others for its experiment. That bill would eat up almost a third of the city's $9.2 million annual budget.

Paying those fees could tip Hazleton into Act 47 receivership, a state oversight program for distressed municipalities, according to Mayor Joe Yannuzzi, who voted for the measures when he was city council president.

Property taxes would also have to double to pay the legal bill, he said.

"It would be devastating," Yannuzzi said. "I don't think the public could handle that much of an increase."

Once home to Europeans who came to mine coal, Hazleton's Hispanic population soared to 37 percent of an estimated population of 25,340 in 2010 from 5 percent in 2000, according to U.S. Census Bureau data.

The law proposed by then-Mayor Louis Barletta sought to impose fines of $1,000 per day on landlords who rented to illegal immigrants and businesses that hired or served them. Barleta said an influx of illegal Hispanic immigrants caused higher crime, lower tax revenues and stressed public schools.

"I took an oath of office to protect the people in my city," Barletta, now a Republican congressman, said in an interview. "I don't regret it."

To defend the law, the city enlisted outside lawyer Kris Kobach. Kobach is the secretary of state of Kansas and the man behind some of the nation's most controversial state and local immigration measures. That included an Arizona law, most of which was struck down by the U.S. Supreme Court in 2012.

Hazelton's law "made it a violation to unknowingly sell a cup of coffee to an undocumented immigrant," said ACLU lawyer Witold "Vic" Walczak. "There was no defense."

Kobach told Hazleton officials in December that they faced "a high probability of being liable" for the $2.8 million of plaintiffs' legal fees, according to a document obtained by Reuters under Pennsylvania's Right-To-Know law.

In Farmers Branch, Texas, Kobach's work on a similar ordinance left the Dallas suburb with a legal bill of nearly $5.9 million.

Kobach did not respond to requests for comment.

(Editing by Hilary Russ in New York and Jonathan Oatis)