Respectfully submitted by Lawrence Rafferty (rafflaw)-Guest Blogger
After writing an earlier article about the Pennsylvania Voter ID law, I saw another article about a Pennsylvania issue that seems a little hard to comprehend. Recently, the City of Scranton, PA decided that it could not afford to continue to honor its contractual obligations with its City Fire, Police and Public union workers. One problem with Scranton’s decision is that a Federal judge had ordered that the City must honor its obligations to the employees under the terms of a temporary injunction that he granted the employees.
“In defiance of an injunction issued in Lackawanna County Court, hundreds of city employees will open their checks today to find they were paid only minimum wage for their work. Amid Scranton’s ever-deepening financial crisis, Mayor Chris Doherty said his administration is going forward with a plan to unilaterally slash the pay of 398 workers to the federal minimum of $7.25 an hour with today’s payroll, insisting it is all the city can afford. That will likely earn administration officials an appointment with Judge Michael Barrasse, who granted the city’s police, fire and public works unions a special injunction temporarily barring the administration from imposing the pay cuts after a brief hearing Thursday.” Times-Tribune
I can understand that Scranton is having financial difficulties, but defying a Federal court order does not seem to be a reasonable response by the Mayor of Scranton. According to the Times-Tribune article linked above, the financial difficulties have been worsened by political squabbles between the Mayor and City Council on just how to raise and/or borrow more revenue.
“The mayor and council remain at odds over the adoption of an updated Act 47 recovery plan. Mr. Doherty has proposed a 78 percent property tax increase over three years, along with a hike in the garbage fee. However, council has refused to pass it and wants the mayor to consider alternative revenue sources.City officials say without a recovery plan, banks won’t provide the financing the city needs to cover a $16.8 million gap in 2012 budget, and without the borrowing, the city will soon run out of money.”
Without filing for Bankruptcy, how does the City of Scranton think they have the unilateral legal authority to change the terms of collective bargaining contracts? If the employment contracts changes are upheld, how long will underpaid Fire, Police and City workers stay on their jobs? How will public employees in Scranton and elsewhere react if the unilateral changes are allowed to stay? How long would you stay on the job if your contract was unilaterally changed without your approval? The article linked above also suggests that Scranton is close to defaulting on its health care benefit insurance bill.
How long will Scranton have before Gov. Corbett tries to step in under Act 47 and attempt to take over the day-to-day operations of Scranton, like he tried in Harrisburg? US News What would you do if you were the Mayor of Scranton? What would you do if you were Judge Barrasse? Most importantly, what will happen to Dunder Mifflin if Scranton, PA goes under?
puzzling:
it is as it always will be. You cannot spend more than you earn. It just doesnt work.
Taxpayer POV
Scranton has no cash. Scranton has already defaulted on debt obligations and cannot borrow further unless it offers Greece-like rates. Scranton cannot fire workers due to contracts. What options are left? Seizure and auctions of private property?
.. insane rules in Pennsylvania prohibit cities from filing bankruptcy without state approval.
Thanks Downeast!
Me, right you are, all of the above. add in the
banksters
and the hedge fund managers
and Congress for deregulating the finance industry
and the SEC for not doing its job
and the FED for it secret multi-trillion dollar bailout
and
gotta run some errands now.
It’s the 1%ers fault, clearly.
Or the republican’s.
Or George W Bush.
Probably all of the above.
Great story Raff. Looks like the Mayor & cohort are playing the “chicken” game w/ the court. If Scranton lays-off workers then the workers are elegible for unemployment. Reduce pay to minimum and if workers quit, NO unemployment. If the workers don’t do their jobs they get fired and again NO unemployment. If the court orders an administrative take-over the council can cry that the Mayor forced the situation, like-wise the mayor will cry that he was only following public mandate. Seems like its time for residents to head to Wilkes-Barre before the town is under seige.
All things considered, the mayor did the right thing (not necessarily lawful given the judge’s order). He paid everyone according to the minimum wage. EVERYONE got something rather than paying himself or a few their full salary. It’s not a good thing when lots of people get laid off and the remaining few have to do their own jobs and that of those who were laid off. It’s the equivalent to taking a forced cut in pay of 50% +/-
————–
When we think of the financial disaster, consider that the money didn’t go up in smoke. It didn’t evaporate. The money went into a few select pockets. Those whose pockets were filled by getting out of the stock market (by insider trading?) took money from retirement funds and from city and state investments. Many took money thru bonuses for committing fraud. The money still exists. The bailouts were the largest transfer of wealth. The crash of the stock market is right up there as a huge transfer of wealth. And those whose pockets are stuffed with what I consider ill-gotten gains are weeping big tears b/c there is a demand that they pay full share of taxes. Romney isn’t the only one paying the less 15% rate.
————————
feemeister, Good points about there being enough money for stuff the people don’t want but not enough for what most of us do want. And that $2 trillion that no one’s had to account for. Sure was handy that the “planes” took out what they did in the towers and the pentagon.
Matthew, I think few voters go past the PR campaigns. Whether a candidate has the ability to balance a budget I am afraid rarely enters into it.
Defiance of a federal order…. Injunction to boot….reminds me of a little old school in Arkansas not in the far too distant past….. Then again…. Bush did what he wanted….. And now Obama is following suit….. Hmmmm….
Good article raff…
Then they should close the fire department, if that is what the citizenry has demanded via their refusal to fund same.
It’s not called “keeping them on the payroll” if they are not paid for their work. And this has nothing to do with union/non-union, contract or anything else; it’s simply not legal to change the terms of employment AFTER the work was done, no matter who you work for, whether you’re union or not. Scranton has exchanged one legal debacle for another toward no good end.
It’s simple: if the citizens want the work to be done, it must be paid for. They can’t do otherwise because it is not legal (or fair).
asiago,
It’s just not that easy to lay these public sector workers off. Some in Scranton were laid off last year going into the 2012 budget cycle, but there is “minimum manning” regulation won by unions that requires the city to keep specific staff levels (like firefighters) on the payroll.
The mayor did have an option. It’s called lay-off. If the employee pay did not exist, it was stealing to allow them to do work for which they would not be paid. Their labor was STOLEN.
In addition, it is illegal to change the terms of payment AFTER the work has been done. So now the employees have a valid class action lawsuit to pursue.
The fact is, if an entity has no money to pay for work to be done at the agreed price, they can either renegotiate the price prior to the work being done, or they can lay off as many employees as they are unable to pay. Having people work for free is not an option, unless they have volunteered to do so, but all of those workers did work the majority of their pay period for free. This is theft of wages.
I am guessing that unemployment insurance payments for these workers would have been higher than minimum wage, adding insult to their injury.
If the good people of Scranton refuse to pass a tax increase sufficient to pay their workers, the workers must be laid off, and the work will not get done. Tough. You don’t have the right to steal from others. There simply is no other option for Scranton’s mayor unless the workers themselves agree to a modification of their agreement before doing the work.
A federal judge can order whatever they like- if it’s not within the realm of possibility, that order becomes unenforceable. This is a problem nation wide. When property took a hit in 2007, it dropped income streams for the entire nation. The city is at fault for allowing unions to negotiate the extortionist rates for benefits that no one else in America gets, only government employees and the top 10%. Public employee unions support an elected official, and that elected official grants them more contract money, so that they can then support that elected official again. It’s a nasty cycle, and one that Wisconsin was fortunate enough to finally break. Other governments, city, state, and federal, should take that example and shatter unions that operate in bad faith.
“There is a conundrum in the thinking of low information voter and teabaggers. They claim to believe government is the problem and if we have less government, things will be all better. So it is all President Obama’s fault for not taking care of things. I am sorry, I have a headache from trying to untangle that Gordian Knot of logic.” -O.S.
A couple of problems with that, Comrade OS. (And before you start whining about ad hominem, see “teabagger”). First, the fact that we pay 60% of GDP to operate government at local, state, and federal levels in total is a huge problem. Tea Party members aren’t arguing that Obama isn’t doing anything to fix it- they’re arguing that he’s sticking his finger where it doesn’t belong. Big government is the problem. I’m not an idiot who thinks that complete deregulation is the solution, but when government sticks its nose into everything, it screws everything up, every time.
The financial disaster we just went through shows private capital and investments cannot act responsibly without tight regulation. Talk about irresponsible! They were more crooked and irressponsible than any government.
I’m just a bit confused here! I’m seeing in the sky that there is plenty of money for chemtrail planes and pilots and sprays. I see in the papers that there is plenty of money for surveillance cameras to be put on streetlights where the conversations and movements of people walking along a sidewalk can be monitored, as well as they will have the ability to bark at you through the streetlight speaker to stay off the grass. I see that there is plenty of money to have drones all over the country spying on everyone, with some being able to injure or kill people. I’m seeing police agencies receiving military supplies that they supposedly now need to outfit them for protection from us civilian terrorists. I see that we have money to send lots of battleships to the Persian Gulf. Now, not even worrying about whether or not you believe these things should be done, HOW do you justify spending money on them in this economy?
I guess this is a stupid question, but HOW DO THEY HAVE ALL THAT MONEY when our cities can’t afford to pay our policemen and firemen? I am just not understanding this at all.
Also saw the youtube recently where Rumsfeld announced (I think it was on CBS news) the day before 9/11, that the Pentagon had misplaced 2.3 trillion dollars. (I also saw somewhere that the area of the Pentagon that was hit was where all the financial records were stored.)
http://www.youtube.com/watch?v=xU4GdHLUHwU
This is all just mystifying to me! (Not to mention, it’s VERY mystifying to me how you misplace well over $2,000,000,000,000.)
And poor Scranton! Perhaps Dwight could take over if they fired the mayor, and bring the city back up by its bootstraps. He’s always got a plan!
Scranton is bankrupt. While the judge can order these employees be paid, unless he can create money there is really no mechanism to write these checks. Scranton has $100K in cash available this week with a $1M+ payroll to fund.
Scranton recently defaulted on Scranton Parking Authority obligations of over $1M, with tens of millions more guaranteed by the city. They cannot float more bonds to raise cash.
Scranton’s pension obligations are underfunded to the tune of $60M.
I would recommend that Scranton file bankruptcy immediately, extracting themselves from public sector contracts allowing themselves to downsize staff and renegotiate wages. They should write off as much debt as possible, and restructure pensions to more realistic levels if they cannot default on them entirely.
Chapter 9, get used to hearing it.
HPL,
I confirmed your information. Thank you for the correction. Judge Barrasse is indeed a Lackawanna County judge.
HPL,
The articles claim the judge is a Federal judge. Thanks for the information. I will dig deeper on Judge Barresse.
Scranton may be able to solve its problem if the mayor and council work together. Given their current situation, a bond will be expensive but necessary, although I believe bonds are intended for a specific capital project. Going after the PILOTS is a good idea. Syracuse and NYC are cities that each have one or more universities with lots of tax free property, much of it income producing. Even if it’s not income producing it’s taking tax properties off the tax rolls. It’s unfortunate that the mayor had the checks cut as they did, (don’t p… off the judge) but an IOU that pays back wages as soon as it can be done is the remedy. Unfortunately, most mayors and city council members seem to be politicians and not fiscal managers. Maybe I just doused my upbeat hope with political reality.