Scranton mayor slashes pay

[Texas Proud]

Scranton mayor slashes pay for all city workers—including police and firefighters—to minimum wage



Scranton mayor slashes pay for all city workers


Seems a little drastic, until you see that the city only has $133,000...

 

[MasterBlaster]

Scranton mayor slashes pay for all city workers—including police and firefighters—to minimum wage

Scranton mayor slashes pay for all city workers

Seems a little drastic, until you see that the city only has $133,000...

We should see this game played out in many local governments and in many different flavors ...

Who gets paid when the money runs out ?

 

[Texas Proud]

We should see this game played out in many local governments and in many different flavors ...

Who gets paid when the money runs out ?

I agree. I am just surprised they did not go into BK to do it... making these decisions without the backing of the legal system seems shortsighted... just trying to stay out of BK when you really are BK seems like a foolish decision....

 

[M Paquette]

Who gets paid when the money runs out ?

Judging from the article, the lawyers.

 

[mickeyd]

I assume that the mayor is running, or has designs on, some other higher office and this may get him recognition that he would otherwise not receive.

Am I too cynical?

 

[Midpack]

Sad but obviously lots of gamesmanship all around, ain't politics lovely. We'll see...

 

[eytonxav]

Did he also cut his own pay to minimum wage, I certainly hope so.

 

[Texas Proud]

Did he also cut his own pay to minimum wage, I certainly hope so.

It was on the news last night and IIRC, he did... (but, not sure as I was not paying that much attention)

 

[Midpack]

Did he also cut his own pay to minimum wage, I certainly hope so.

Google would have answered your question...

Public sector workers in Scranton, Pennsylvania, are battling the city’s mayor in court after he unilaterally cut their pay to the minimum wage of $7.25 an hour amidst a financial crisis. Scranton Mayor Christopher Doherty cut his own pay and that of the workers after the city reportedly had only $5,000 in the bank last week.

 

[eytonxav]

Google would have answered your question...

Oh josh, why didn't I think of that

 

[easysurfer]

Desparate times call for desparate measures.

 

[ziggy29]

Everyone is between a rock and a hard place here. Yes, I can understand why city employees are fighting this... but on the other hand, if the only alternative is to file bankruptcy which can effectively nullify the existing collective bargaining agreements, would they be better off in the long run? And at least the mayor is eating his own cooking here.

It's a mess everywhere. There are no pleasant answers. IMO what needs to happen is a good faith renegotiation of the existing CBA, where *all* parties are willing to look for compromise and consensus. And I suspect that's what the mayor is ultimately hoping to do here.

 

[Texas Proud]

Everyone is between a rock and a hard place here. Yes, I can understand why city employees are fighting this... but on the other hand, if the only alternative is to file bankruptcy which can effectively nullify the existing collective bargaining agreements, would they be better off in the long run? And at least the mayor is eating his own cooking here.

It's a mess everywhere. There are no pleasant answers. IMO what needs to happen is a good faith renegotiation of the existing CBA, where *all* parties are willing to look for compromise and consensus. And I suspect that's what the mayor is ultimately hoping to do here.

I do not disagree with your post.... but the more I think about it, the more I wonder what people were doing as the money went down to basically nothing

IOW, this crisis was easily seen by all probably a long time ago (at least when they did not vote to raise taxes)... I guess they were hoping to get a bail out and kept spending accordingly...

 

[mickeyd]

Saw on CNN this AM that a 3rd CA city is filing for bankruptcy. Sounds serious. Taxpayers have no money and workers need to get paid. Sometimes they are the same folks!

 

[Midpack]

IOW, this crisis was easily seen by all probably a long time ago (at least when they did not vote to raise taxes)... I guess they were hoping to get a bail out and kept spending accordingly...

Not as dire as Scranton maybe, but the reasons they didn't deal with it even though the 'crisis was easily seen by all' was probably the same as dozens/hundreds of other cities, the USA itself, and several other countries (ie, Europe). People want (much) more than they're willing to pay for and/or they expect "someone" else to pay for them - and then act surprised when the politicians they elect kick the can down the road again. The electorate is a least as much to blame.

Scranton isn't the first, and won't be the last...

 

[eytonxav]

Not as dire as Scranton maybe, but the reasons they didn't deal with it even though the 'crisis was easily seen by all' was probably the same as dozens/hundreds of other cities, the USA itself, and several other countries (ie, Europe). People want (much) more than they're willing to pay for and/or they expect "someone" else to pay for them - and then act surprised when the politicians they elect kick the can down the road again. The electorate is a least as much to blame.

Scranton isn't the first, and won't be the last...

+1 this what I was thinking as well, especially with respect to the USA as a whole. Perot sent up the distress signals long ago, but everyone still prefers that kicking the can approach to taking unpleasant medicine. I really don't hold the voting public to blame so much though, since who ever we elect never seems to do the people's bidding anyway. Hopefully the crises that cities like Scanton are seeing will a result in broader wake-up call for everyone to start taking fiscal responsibility more seriously and that we stop the can kicking.

 

[Texas Proud]

Not as dire as Scranton maybe, but the reasons they didn't deal with it even though the 'crisis was easily seen by all' was probably the same as dozens/hundreds of other cities, the USA itself, and several other countries (ie, Europe). People want (much) more than they're willing to pay for and/or they expect "someone" else to pay for them - and then act surprised when the politicians they elect kick the can down the road again. The electorate is a least as much to blame.

Scranton isn't the first, and won't be the last...

+1 this what I was thinking as well, especially with respect to the USA as a whole. Perot sent up the distress signals long ago, but everyone still prefers that kicking the can approach to taking unpleasant medicine. I really don't hold the voting public to blame so much though, since who ever we elect never seems to do the people's bidding anyway. Hopefully the crises that cities like Scanton are seeing will a result in broader wake-up call for everyone to start taking fiscal responsibility more seriously and that we stop the can kicking.

I am not talking about long term or medium term problems like you mention (except for Greece)... This was a short term issue... just a guess, but I bet they could predict when the cash would run out 6 months before it did.... even if they did not, what about 3 months

If they did not, then the finance people were not doing there job... you do not wait until it is payday and they say 'whoops, we don't have any money to pay you'..... just my opinion...

But yea, the electorate does have some blame in the problem...

 

[ziggy29]

+1 this what I was thinking as well, especially with respect to the USA as a whole. Perot sent up the distress signals long ago, but everyone still prefers that kicking the can approach to taking unpleasant medicine.

I think politicians were hoping they could kick the can long enough to get them to retirement, and the electorate was hoping we could kick the can long enough so it wouldn't hit the fan until they were dead.

Can't kick the can any more, folks. Time for some medicine which won't taste pleasant to anyone.

 

[Htown Harry]

We should see this game played out in many local governments and in many different flavors ...

It's a mess everywhere.

the 'crisis was easily seen by all' was probably the same as dozens/hundreds of other cities, the USA itself, and several other countries (ie, Europe)....

Scranton isn't the first, and won't be the last...

Sometimes we can be a gloomy bunch here on ER.org. With respect, I offer a few statistics that contradict the opinion that there is an increasing frequency or severity of state and local government fiscal disasters.

There are 50 states, 3033 counties and 18443 municipalities in the U.S.

Of those 21,500 +/-, only 13 filed for Chapter 9 bankrupcy in 2011. (0.06%) The number so far is 2012 is also about one per month.
County (United States) - Wikipedia, the free encyclopedia
Google Answers: Number of Cities, Towns and Villages in the United States
Chapter 9, Title 11, United States Code - Wikipedia, the free encyclopedia

Between 1990 and 2010, the number of Chapter 9 municipal bankrupcies ranged from 3 to 18 per year. On average, the early 1990's had more municipal bankrupcy filings that more than in recent years.
http://www.abiworld.org/statcharts/Chapter9Filings1980-Current.pdf

Depending on how it is counted, between $2 billion and $25 billion of $3.7 trillion of municipal debt (between 0.01 and 0.1%) defaulted in 2011. Many of these were specialty issues, like housing bonds.
Whitney


My point is not to minimize the very real distress of those state and municipal governments that do make the news from coast to coast. "Many" are indeed in a mess. Perhaps even the majority of local governments in the U.S. have some component of their balance sheet that could be characterized as "kicking the can down the road".

In any statistical population, however, the whole is only partially defined by the extremes. Plenty of state and local governments are making decisions to balance budgets, reduce spending or even to (gasp!) raise taxes to balance budgets, pay pensions and cover their debt service.

By comparison, 88 of 5091 publicly traded corporations filed for bankrupcy in 2011 (1.7%)
Continuing Decline In Number Of US Publicly Traded Companies - Misunderstood Finance
Corporate bankruptcies fall in 2011 - Los Angeles Times

 

[Texas Proud]

It is interesting that today I got a mailing from our school district. It is a normal mailing talking about what is happening at different schools, next years calendar etc. etc.

What got my attention was the budget. I have not read the whole thing yet, but they said that they have to have a MINIMUM of 2 1/2 months of expenses set aside in a reserve fund. At this time, they have 3 months which is about $100 million.

This is what I mean when I talk about how they should have addressed this issue long before they had less than $100K in the bank... once you start to use ANY of the money in a reserve fund, you have a problem that needs immediate attention.....

 

[Texas Proud]

Sometimes we can be a gloomy bunch here on ER.org. With respect, I offer a few statistics that contradict the opinion that there is an increasing frequency or severity of state and local government fiscal disasters.

There are 50 states, 3033 counties and 18443 municipalities in the U.S.

Of those 21,500 +/-, only 13 filed for Chapter 9 bankrupcy in 2011. (0.06%) The number so far is 2012 is also about one per month.
County (United States) - Wikipedia, the free encyclopedia
Google Answers: Number of Cities, Towns and Villages in the United States
Chapter 9, Title 11, United States Code - Wikipedia, the free encyclopedia

Between 1990 and 2010, the number of Chapter 9 municipal bankrupcies ranged from 3 to 18 per year. On average, the early 1990's had more municipal bankrupcy filings that more than in recent years.
http://www.abiworld.org/statcharts/Chapter9Filings1980-Current.pdf

Depending on how it is counted, between $2 billion and $25 billion of $3.7 trillion of municipal debt (between 0.01 and 0.1%) defaulted in 2011. Many of these were specialty issues, like housing bonds.
Whitney


My point is not to minimize the very real distress of those state and municipal governments that do make the news from coast to coast. "Many" are indeed in a mess. Perhaps even the majority of local governments in the U.S. have some component of their balance sheet that could be characterized as "kicking the can down the road".

In any statistical population, however, the whole is only partially defined by the extremes. Plenty of state and local governments are making decisions to balance budgets, reduce spending or even to (gasp!) raise taxes to balance budgets, pay pensions and cover their debt service.

By comparison, 88 of 5091 publicly traded corporations filed for bankrupcy in 2011 (1.7%)
Continuing Decline In Number Of US Publicly Traded Companies - Misunderstood Finance
Corporate bankruptcies fall in 2011 - Los Angeles Times

I think the issue is how many are close to being there Also, as of now Scranton has not filed. I have read about other cities who have cut their services back by 50% or more to prevent BK.

 

[Midpack]

I think politicians were hoping they could kick the can long enough to get them to retirement, and the electorate was hoping we could kick the can long enough so it wouldn't hit the fan until they were dead.

Can't kick the can any more, folks. Time for some medicine which won't taste pleasant to anyone.

I would have said we couldn't kick the can anymore a few years ago too, yet here we are, still kicking. The medicine just gets worse while we wait...so far we haven't tasted it at all.

 

[pb4uski]

It seems like that mayor's choices were 1) what he did, 2) bankruptcy or 3)write checks that he knew would bounce. I applaud his courage in highlighting the issue. At the same time, I could see a problem in that any skilled employees will leave asap and move on to better things and the laggards that have little other choice will linger on.

 

[Hamlet]

It seems like this situation is the reason we have bankruptcy.

It looks to me like they should have entered bankruptcy long ago, but just ignored the problem until the money ran out, and then pulled this pointless stunt.

It seems like that mayor's choices were 1) what he did, 2) bankruptcy or 3)write checks that he knew would bounce. I applaud his courage in highlighting the issue. At the same time, I could see a problem in that any skilled employees will leave asap and move on to better things and the laggards that have little other choice will linger on.