"The judge can rule against us, but I don't know how to pay the money."

When you’re broke, you’re broke!

BY DAVID SINGLETON (Times-Tribune Staff Writer)
Published: July 5, 2012

Mayor Chris Doherty said today he will go forward with paying hundreds of city employees minimum wage despite a Lackawanna County judge hours earlier temporarily shooting down his plan.

According to city officials, there will only be enough money to meet the minimum-wage payroll when the checks go out tomorrow.

After a short hearing this morning, Judge Michael Barrasse granted a special injunction sought by the police, fire and public works unions to block imposition of the administration’s plan, which would have cut employee wages to $7.25 an hour while the city deals with its ever-deepening financial crisis.

Mr. Doherty said he respects Judge Barrasse’s perspective, but the city does not have the cash to meet the full payroll.

“The judge can rule against us, but I don’t know how to pay the money,” he said.

If the money isn’t there, then the money isn’t there. Assuming that Mayor Doherty’s statements are correct, there is enough money in city accounts to pay everyone if they are paid at the minimum wage, but if they are paid their full rates, some of the checks will bounce . . . or just not get written at all. Since it’s a felony to knowingly write rubber checks, there are only three options:

  1. Write full paychecks, based upon either seniority, a lottery, or some other system, up to the point at which the money runs out;
  2. Write partial paychecks, at the minimum wage, to all employees; or
  3. Not pay anybody.

The Mayor and the city Administration1 were trying to see to it that everybody got at least something, as in Option #2. Option #1 would be difficult to administer, and could never be administered fairly, which leaves only Option #3.

And that, of course, has to mean layoffs, and large numbers of layoffs.

The city government is arguing with the Business Administrator on how much taxes should be increased:

Scranton City Council’s ideas for raising alternative revenues and proposing much-lower tax increases than Mayor Chris Doherty has would still leave huge budget deficits, according to an analysis of council ideas by city Business Adminstrator Ryan McGowan.

But council President Janet Evans claimed Mr. McGowan used some inaccurate numbers, and the council is preparing a response.

Council and mayor have been sharply divided over revising an Act 47 recovery plan the mayor says wary banks are requiring before they would consider again providing financing needed to keep the city afloat this year.

In May, Mr. Doherty proposed a recovery plan that contains a 78% tax increase over the next three years. The council has balked at such large tax hikes and wants to offset them by maximizing alternative sources of revenues, such as contributions from nonprofits, and commuter, payroll and sales taxes. The mayor has countered that alternative revenues won’t raise enough money and won’t occur quickly.

One thing is obvious: a 78% local tax increase isn’t anything which should be labeled a “recovery plan” by anybody. There are a lot of poor people in Scranton, people who are just making ends meet, and a near-doubling of their local taxes will be beyond their means.

And “commuter, payroll and sales tax” increases will simply encourage new businesses, and perhaps some older ones, to locate outside of the city limits. Some businesses will be location-dependent, and cannot move, but there will be many which could simply be a block outside of the city line, not lose customers and business at all, and gain a competitive advantage on prices and employees.

  1. Mayor Doherty and all five city councilmen are Democrats.

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