Scranton versus the Courts

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?



40 thoughts on “Scranton versus the Courts”

  1. While selling bonds would be an option, who in their right mind would actually buy them? Purchasing a bond from the city would seem less like a highly-speculative, low return investment, but rather a straight up gamble that you aren’t just throwing your money away for the greater good.

    Still, the most upsetting part to me is that voters will not hold anyone accountable, and while they may remember this problem come November, it will be long since forgotten by 2014/16 (not that voters making different choices would have any effect on whether a government can run a balanced budget though). 🙁

  2. Judge Barresse is not a Federal Judge, he is a Lackawanna County Court of Common Pleas Judge.

  3. 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.

  4. Matthew:

    The Public Safety Employer-Employee Cooperation Act of 2009 prohibits the police and firefighters from striking.

    I am usually of the opinion “Break a deal, spin the wheel.” So if the city needs to float a bond to perform on their labor contract then so be it. Breaking a federal judges order? Can’t have that either. A simple solution:

    Municipal Bond for the City, Bail Bond for the Mayor.

    But seriously, the bitter sweet part of this is the the taxpayers will get stuck with a bill in some manner for the city’s lack of financial solvency. Bad for the average person / business, however often times people get the politicians they deserve. I hope they have an effort to organize a recall ballot.

  5. Sorry to post two comments, but the complete inability of anyone that has any modicum of power to exercise such power responsibility is more than depressing. Why do people who clearly cannot balance a budget (and then resort to extreme tactics like cutting entitlements people have paid into their whole lives, cutting other benefits, unilaterally slashing wages, etc.) continue to be elected and continue to exercise this poor level of judgment? Sure, a lot of this sort of damage occured slowly over the course of multiple administrations, so there are obvious structural problems with representative government, but how have we completely and utterly failed to solve these problems in 200+ years of experience? As a young person who has always believed that government can actually be good, I increasingly find myself wondering whether we should even bother since every single shred of evidence weighs against that conclusion.

  6. Thank you for bringing this to our attention. I haven’t seen this in any news outlet, and this seems like a pretty radical action on the part of the city. I assume that these workers are statutorily prohibited from striking as well?

  7. How many legions has federal Judge Michael Barrasse?

    For that matter, how many has Mayor Doherty?

    I expect that will be determinative.

  8. The business-as-usual state of mind is in most every government official, evidently not being able to believe or at least act upon bad news:

    As cities across the nation face increasing budget strains, the vocal group of experts warning about municipal defaults has gained a powerful member: Jamie Dimon.

    The JPMorgan CEO said he expects to see more U.S. municipalities declare bankruptcy, Bloomberg News reports. His concerns echo those of Meredith Whitney, the analyst who has said the next major financial crisis will come from a wave of local government defaults, and those of famed investor Warren Buffett, who has called the municipal debt situation a “terrible problem.”

    “If you are an investor in municipals you should be very, very careful,” Dimon said, according to Bloomberg.

    (The Graphs of Wrath). There were many warnings that cities would face very troubling times as the middle class was wiped out by the 1%.

    Many government folk get trapped by propaganda they spew out, and as a consequence they think anything any governing official says is not to be taken seriously.

    Self-delusion is paralysing.

    There have been warnings that endless wars, nation building of foreign nations, and deregulation of financial institutions would be crippling.

    Yada, yada, yada officials think as they speed headlong into one disaster after another thinking “it is all BS anyway, we will be fine“.

    Next thing you know, rafflaw is pointing out that such BAU is not working.

  9. Scranton isn’t the only city doing this. PILOTs were and are sought by companies looking to relocate. They bargain to pay PILOTs instead of the taxes that they would otherwise pay. The PILOTs are much cheaper than taxes.

    On another thread we discussed the question of taxing churches, et al. That’s what several cities are doing. Universities, in particular, are good targets. They buy up properties on which they make money but claim exemption b/c they are not for profit. PILOTs seem to be a good way to get good “citizens” (corporations are people,you know) that are normally not taxed to pay their fair share. I think most communities that host colleges or universities have the same problem.

    So far it seems that they want churches to pay PILOTs on properties that don’t include the church proper, just that which is owned for profit. (Let’s not argue about whether the pulpit is intended to make profit).

    google for payment in lieu of taxes
    google for pilots and you’ll get links for aircraft pilots

  10. Interesting link bettykath. If Scranton wants to point a finger at non-profits, the churches should not be exempt.

  11. Looks like Scranton is going after revenue raising properties of the hospitals and universities

    Scranton, Pa., home of Dunder Mifflin on NBC-TV’s “The Office,” is always trying to find ways to get money from the University of Scranton, a Jesuit school. Recently, Scranton had to borrow $1.5 million to meet its payroll. The City Council got the university to increase its annual contribution to the city from $110,000 to $175,000, but now wants more, and it wants other educational institutions to ante up as well (many haven’t even responded to or acknowledged the city’s request). The Council’s so-called “supermajority” favors a fair tax for nonprofit property owners. This time around, Scranton’s three taxing entities overcame their mutual sensitivities and agreed to meet to plot a collaborative strategy to squeeze the university and other nonprofits. Note their strategy to play to Scranton taxpayers: One of the city representatives said that a 26-page list of tax exempt properties represented “multiple, multiple millions of dollars” not being collected from tax-exempt property owners, a “total tax loss from tax-exempt properties,” according to the City Council chairwoman, of “$196,293,893.” One doubts that the three taxing entities are taking quite as close a look at PILOTs from churches and synagogues as they are from universities and medical facilities.

  12. The Mayor is going to have to face an upset Federal Judge due to his decision. The Council and the Mayor have to get on the same page, but I do not know if that is going to happen.

  13. Time to cut the pay for the mayor and city council to minimum wage including any contributions to their healthcare and retirement fund.

    As to banks not providing the financing without a recovery plan … that’s a joke, right? Banks accepted lots of our money and had no recovery plan.

    Honestly … this is ludicrous.

    If I were mayor or city council member, I’d quit because I’m obviously not up to the job. Give the people of Scranton an opportunity to elect capable representation. It’s the only honorable thing to do.

  14. The problem is not unions, but dysfunctional local government. It is obvious that the political leaders need to get a plan in place to raise revenue. The mayor did the only thing he could do other than write hot checks, which is ILLEGAL too.

Comments are closed.