Scranton , Pa faces 117 percent property tax to balance budget .... and that's before the city police and firefighter union pension issues get sorted out....

http://globaleconomicanalysis.blogspot.com/2013/07/scranton-needs-117-property-tax-hike-to.html

Tuesday, July 23, 2013 11:25 AM

Scranton Needs 117% Property Tax Hike to Balance Budget; Simple Truth: Scranton is Bankrupt

Those looking for the next city to go bankrupt should consider the possibilities in Scranton.

The Pennsylvania Economy League projects Scranton could be looking at $18 million deficit, 117 percent tax hike in 2014. 

 Scranton taxpayers could face a 117 percent increase in taxes next year as the city's finances continue to spiral out of control.

A new analysis by the Pennsylvania Economy League projects an $18 million deficit for 2014, an amount so massive it outpaces the approximate $17 million the struggling city collects annually in just property taxes.

Though council members did not extensively discuss the PEL letter Thursday, council Finance Chairman Frank Joyce said after the meeting, "The tax increase they (PEL) recommend is far too expensive for taxpayers to handle."

Mr. Joyce suggested that perhaps the city could refinance debt to implement a financial maneuver called a "scoop," in which higher debt service payments due next year are scooped out of the budget and swapped with lower payments due in future years. The city implemented such a scoop for the 2013 budget by refinancing debt to have lower debt-service this year than it otherwise would have had, Mr. Joyce noted.

"The city's definitely going to need help," Mr. Joyce said. "Maybe we can refinance debt to lessen the tax impact through a scoop. It may be viewed by some as kicking the can down the road, but it may prove to the state that we need a (countywide) sales tax."

Inane Discussion

PEL's proposal to raise property taxes is absurd. So are proposals for a countywide tax to bail out Scranton.

City bureaucrats and the PEL can hem and haw and piss and moan, but can-kicking exercises, "scoops", and tax hikes will only make the problem worse.

It's time for Scranton to face the simple truth. It is bankrupt.

Mike "Mish" Shedlock


http://thetimes-tribune.com/news/court-sets-deadlines-in-scranton-union-pension-boost-case-1.1524433

Court to weigh city pension increase

A state appeals court started the process of reconsidering whether the city's police and firefighter unions should get a sharp boost in their pensions.

The Commonwealth Court last week ordered lawyers for the city, the Pennsylvania Economy League and the state Department of Community and Economic Development to file legal briefs outlining reasons against the boost by Aug. 16. Union lawyers will have 30 days after they receive copies of those briefs to file a response making the legal argument for higher pensions.

The court did not say if it would have a hearing on the legal arguments, but said it would decide on further scheduling after both sides file their briefs.

As part of its 2010 decision striking down expensive union contract arbitration awards, the Commonwealth Court said firefighters and police officers could only receive annual pensions no greater than 50 percent of their highest salaries. The state Supreme Court overturned the Commonwealth Court and reinstated the arbitration awards, which gave city police and firefighters substantial pay increases and bonuses dating to 2003, but sent the pension issue back to the Commonwealth Court for reconsideration.

The police and firefighters say their pensions should be the 70 percent in the contract arbitration awards, but the city lawyers will argue for the 50 percent cap set by the Commonwealth Court.

The unions contend the other 20 percent could come from the city budget rather than from pension funds, something that has been done in the past.