Unions Bankrupt Scranton, Who’s Next?

The City of Scranton is broke. It can’t pay its employees and faces a budget deficit of about $16 million this year, thanks to a toxic combination of declining population, relentless government unions, underfunded pensions and financial blunders.

Scranton’s Mayor Chris Doherty took desperate measures earlier this month by cutting all city employees’ pay to minimum wage.

The city entered Act 47, a state program for financially strapped cities, in 1992. Twenty-seven cities are currently in the program, while only six cities have moved out of Act 47 in the program’s 25-year history.

In every Act 47 case, a common denominator is government unions that insist on raises and benefits regardless of a city’s ability to pay. Years ago, Scranton tried to renegotiate union contracts, but instead, courts ordered the city to give workers bonuses and raises.

Without prompt reform, the Scranton saga will be replayed. In south central Pennsylvania, York faces a similar situation with skyrocketing police and firefighter costs. Arbitrators there boosted retirement benefits twice, triggering layoffs, new fees and property tax increases. And Harrisburg remains on the verge of bankruptcy.

The future of our cities depend on the willingness of the legislature, local officials and union leaders to work together and change state laws to allow municipalities to control unsustainable personnel costs. Other reforms like allowing 401(k)-style retirement plans instead of defined benefit pensions, ending prevailing wage laws that inflate the cost of construction projects, and privatizing government parking and other yellow pages government could help save our cities.