The Scranton City Council passed the 2016 proposed budget that increases the operating budget to 132 million dollars. This is a 40 million dollar increase from last year’s budget. All in a city with crushing debt, dwindling population and absolutely no prospects for growth. Of course, the increase is based on pseudo financial accounting and brings to question whether or not the city council can read financial statements. Out of the entire city councilman, only Bill Gaughin had the integrity and good sense to vote against a budget that will send the city into financial ruin. While the rest of the city councilman -Wayne Evans, Joe Rogan, Bill Weschler – voted for a budget that does not make the slightest sense in financial terms.
States and municipalities are required by law to have a balanced budget because they do not have the ability to print money like the federal government does. This idea is stated clearly in Scranton’s Home charter which reads:
The total of proposed expenditures shall not exceed the total estimated funds available. Scranton Home Charter Article 9, Section 903.
Now the almost half a billion dollar question (Scranton’s debt) is, “how in the world does a budget that has mysterious revenue sources and increasing expenditures balance?” This is a simple question because the answer is that it does not balance. This should be under legal review because it is inconceivable that this budget could be considered legal or financially sound. In corporate America, a budget like this would not be able to make to the Securities and Exchange Commission because no CPA in their right mind would put their signature on these “audited” statements and endorse them. To take a look at what I am talking about, here is a look at the proposed budget. Please pay attention to the supposed revenue sources that are accounted for:
We have $12,760,000 coming from loans called “Tax Anticipation Notes” (yes, somehow a loan that increases your liabilities is considered revenue) and another $30,885,500 coming from “Miscellaneous revenues/Cable TV.” This would be comical if it were not utterly sad. These supposed revenue streams will only increase the debt obligation of already drowning city. Current long term Liabilities are at a whopping 410 million dollars!! There is no way Scranton will be able to pay this money back but it seems hell bent on trying to see how soon it can run out of cash. It should be understood that the government of Scranton is operating like a Ponzi scheme. It is attempting to adjust its rating only to borrow more money that it never will be able to pay back. To make matters worse, we are watching them do it! This has gone on for too long and the people of Scranton will not take it any longer. The pension crisis that is about to unfold has a simple remedy. The current trajectory of the Scranton budget will see all pensions vanishing within a year. Yes, that is within a year! This administration has displayed a complete lack of understanding regarding running a government. The only solution for these individuals in government is to have the integrity to step down and give the reins of government to people with competence.