As a struggling economy fights its way back, towns across America are feeling the hit. Scranton, Pennsylvania is the latest to go broke.
Things have gotten so bad, that city workers earnings were cut to minimum wage.
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Scranton’s 398 city workers, including firefighters, police officers and the mayor himself, were paid a reduced rate of $7.25 an hour.
According to CNN Money, the pay cut, which Mayor Chris Doherty has threatened since late June, was carried out even though a coalition of unions had been granted a court injunction that prohibited the mayor from slashing wage rates.
Doherty said he had no choice:
“We have enough money to pay minimum wage and, if more money comes in, we’ll be happy to make those payments.”
As reported by CNN Money:
The pay cuts are the latest, and perhaps most visible, consequence of what critics contend is years of financial mismanagement by the city’s political leadership.
The current imbroglio has its roots in structural deficits and unpaid bills that have forced the city to rely on borrowing to stay afloat. But so far, banks haven’t been willing to lend.
Lenders were spooked after the city council refused to make payments on debt issued by the city’s parking authority. A flurry of resignations followed, and the bond trustee has been replaced.
But the short-term consequences of the dispute are now in full effect — and the city is unable to borrow the money it needs to meet additional obligations.
One bank — M&T (MTB) — had been willing to offer financing, but negotiations collapsed after the city’s political leaders were unable to agree on revisions to Scranton’s so-called Recovery Plan.
The mayor’s plan includes a 78% property tax increase and a hike on garbage fees. A majority of the city council is opposed to the plan, and the two factions remain at loggerheads.
Much of the blame can be linked to the city’s political infighting, which appears to be the root of Scranton’s mounting fiscal problems.
John Judge, the president of the International Association of Firefighters Local 60, said:
“We’re caught in the middle. They talk about a budget deficit, but that’s not it…Mayor Doherty is essentially being a baby. That’s what it boils down to. He’s been so used to having a council rubber-stamp the agenda and now that they’re not, he wants to wreak havoc on everybody else.”
There has to be another option for the city to consider, how can firefighters and police officers make less than the average McDonalds worker?
SOURCE: CNN Money
