Scranton Needs 117% Property Tax Hike to Balance Budget; Simple Truth: Scranton is Bankrupt

Those looking for the next city to go bankrupt should consider the possibilities in Scranton.

The Pennsylvania Economy League projects Scranton could be looking at $18 million deficit, 117 percent tax hike in 2014.

Scranton taxpayers could face a 117 percent increase in taxes next year as the city's finances continue to spiral out of control.

A new analysis by the Pennsylvania Economy League projects an $18 million deficit for 2014, an amount so massive it outpaces the approximate $17 million the struggling city collects annually in just property taxes.

Though council members did not extensively discuss the PEL letter Thursday, council Finance Chairman Frank Joyce said after the meeting, "The tax increase they (PEL) recommend is far too expensive for taxpayers to handle."

Mr. Joyce suggested that perhaps the city could refinance debt to implement a financial maneuver called a "scoop," in which higher debt service payments due next year are scooped out of the budget and swapped with lower payments due in future years. The city implemented such a scoop for the 2013 budget by refinancing debt to have lower debt-service this year than it otherwise would have had, Mr. Joyce noted.

"The city's definitely going to need help," Mr. Joyce said. "Maybe we can refinance debt to lessen the tax impact through a scoop. It may be viewed by some as kicking the can down the road, but it may prove to the state that we need a (countywide) sales tax."

Inane Discussion

PEL's proposal to raise property taxes is absurd. So are proposals for a countywide tax to bail out Scranton.

City bureaucrats and the PEL can hem and haw and piss and moan, but can-kicking exercises, "scoops", and tax hikes will only make the problem worse.

It's time for Scranton to face the simple truth. It is bankrupt.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com