Scranton Runs Out Of Things To Sell, Slashes Wages To Minimum
In defiance of a court order, the city of Scranton, PA has decided on slashing its workers salaries to the federal minimum wage. And once July 13th hits, those workers will lack health insurance as well. This is the climax of a decades long battle between the city and those which work for it.
Scranton, also known as The Electric City, has been mis-managing its finances for some time. With the award of back-fees last year by the State of Pennsylvania Supreme Court, Scranton is left scrambling to make up the shortfall it created for itself by failing to meet its obligations over the past decade. Rather than paying its contracted obligations, the city chose to cheat its way out in an attempt to bust the unions, and when caught was suitably punished. The cost to the Scranton taxpayer is close to double what was saved by the city.
Of course when someone suggests the city may not have made the right decision with its tax cuts over the past decade, the City Council President Janet Evans engaged in diversionary tactics, shifting the blame to the city Mayor, Chris Doherty. The council has blocked repeated measures to attempt to stave off the calamity, but the further they push off the inevitable, the harsher the remedy becomes. The 10.5% tax cut is going to wind up causing an eventual 67% tax hike to make up for the shortfalls. Short term gain for long term pain.
The city has already floated plans to sell off its parking meters and stormwater drains, to ill results. Rather than addressing the root of the revenue shortfall, the city continues to have the lowest tax rates in the area, while having the largest obligations due to the demand of city services caused by such a large population.
This kind of problem is a self fulfilling prophecy. As the city slashed its services, people moved out of the city, which has had a decrease in population of 15.41% since 1990. To entice people back, they slashed taxes, which hurt revenue. To fix budget gaps, they slash services. The slashing of services drives people out of the city. This is the method for city collapse. Failure to maintain the city’s services results in a death spiral of financial calamity.
At the current pace, it is only a matter of time before someone pulls the plug on The Electric City.