May 30, 2017


In Scranton, Pa., Fiscal Progress Comes With Political Costs : The city is on the brink of making a speedy turnaround. The tough financial decisions it took to get there could alter its political landscape. (LIZ FARMER, MAY 30, 2017, Governing)

Facing a new state law in 2014 that would have placed the city in receivership if it didn't make progress, Scranton conquered several key financial demons in recent years.

For starters, the city reached a settlement with police and fire unions over a multimillion-dollar back pay lawsuit first filed more than a decade ago. The Pennsylvania Supreme Court sided with the unions in 2011, but the city couldn't afford to pay the initial $24 million settlement and instead let the award collect interest.

Last year, Courtright announced the city had agreed to pay the unions most of what it owed -- now $30 million -- in exchange for reforms to the city's troubled public safety pension. The biggest concessions were that workers would increase their pension contributions over time and that the pension funds would be managed by a third-party professional administrator. The administrative transfer also included more stringent guidelines for determining whether an employee is eligible for a disability pension.

In the name of budgetary stability, the city has unloaded a couple of albatross assets as well.

Officials negotiated a long-term lease of its parking authority, which had gone into receivership after the default in 2012 because of political infighting between the council and previous mayoral administration. Last year, the city entered into a lease concession agreement that turns over the system's day-to-day operations and long-term maintenance to the nonprofit National Development Council and ABM, a parking operator. After they pay off the parking authority's outstanding debt, ownership of the system will be returned to the city.

The final deal has perhaps been the most controversial and may even be responsible for upending the political harmony the city has achieved. Late last year, elected officials approved the sale of the city's sewer authority to the private company Pennsylvania American Water for $195 million. The city expected to net $95 million from the sale, but various costs, such as easement acquisition, reduced the net to $83 million.

Posted by at May 30, 2017 7:20 AM