The city of Scranton, Pennsylvania has a problem.
Faced with a $20-million deficit, Scranton had to do some tricky maneuvering to balance its budget and avoid defaulting on loans. Most of this maneuvering has involved increasing taxes and fees paid by the people who still live in the town, which has seen its population drop by half since the 1930s.
How much?
In its 2014 budget, the city raised property taxes and trash fees nearly 60% and tripled rental registration fees. The city’s school district, which faced a $4-million deficit, raised taxes 2.4%.
The city already has a 5% tax on “live entertainment”, is discussing a 10% “drink tax”, and has jacked up parking rates. That’s going to help a lot:
The taxes are especially egregious to some because so many of the city’s residents are elderly and living on fixed incomes. The median household income in Scranton is $37,000, and nearly one-fifth of residents live below the poverty line.
I imagine a lot of those folks are going downtown and drinking in the downtown bars. Both of them. There’s only two left: all the others have gone out of business.
The city’s financial problems were accelerated by a 2011 Pennsylvania Supreme Court decision that found that the city owed its police and firefighters unions back pay — about $21 million. The settlement money became due in 2013, but the city bickered over how to come up with the funds for so long that Moody’s warned in November that Scranton faced the threat of default.
How bad is it? Many of the city residents quoted in the LAT would welcome a municipal bankruptcy.
“We’re watching what Detroit is doing, and just figure, with all the money we owe the police and all them, we’re going to be broke for the next 20 years, so why not file for bankruptcy?” said Walter David, a lifelong Scranton resident.
Why not indeed?