Local activist’s ballot initiative employs city’s charter to force government to file for bankruptcy
By Gary St. Fleur
October 6, 2016
Scranton, PA – Several residents of Scranton, Pennsylvania have submitted a ballot initiative to the city council that aims to force the government to file for Chapter 9 Bankruptcy. The petitioners have cited Scranton’s estimated debt of 300 million dollars, its inability to pay creditors, underfunded pensions, and dramatically increased municipal fees. The City of Scranton reached near insolvency in 2012 and since 1992 it has been designated by the state government with a status of ‘financial distress’.
The initiative was created by Scranton resident Gary St. Fleur, who is also a local activist and the founder of SaveScranton.com. St. Fleur and four other Scranton residents argue that the city’s financial situation has been untenable for several years. Using Article 10, Section 1003 of the Scranton Home Rule Charter, they now seek a public initiative that would mandate that the government files for Chapter 9 Bankruptcy. An initiative is a piece of legislation that originates with citizens and brought to a vote, whereas a referendum is a piece of legislation that originates with a legislature and subsequently brought to a public vote.
Once filed with the city clerk, the petitioners are allotted a time period to collect signatures (15% of the voters of the last mayoral election). After the signatures are collected, the city council must then vote on the initiative. If it passes, it will become law. If it does not, it will be put forth to public ballot and the citizens of Scranton will have the opportunity to vote for it. This might be the first known instance of a ballot initiative being used for municipal bankruptcy protection.
The ballot initiative comes at a time when the city’s coffers are consistently strapped for revenue, forcing the city to aggressively sell government property to private individuals or firms. Among the items that have been sold or leased are the Scranton Sewer Authority ($195 million), a public parking garage ($28 million), and a sparsely-occupied shopping mall ($32 million). Taxpayers have strenuously voiced their concern that the burden of the city’s fiscal instability is being placed on their own shoulders.
The city’s budget is primarily marked for government employee compensation, such as elected officials, department administrators, and first responders, as well as the city’s underfunded pensions and payments for disabled employees. Scranton has the highest rate of first responder retirees claiming disability within the Commonwealth. In the meantime, business leaders are frustrated at the amount of red tape and homeowners are faced with owning a residence that has not shifted in value for at least 30 years, or in many cases, have decreased in value. Many properties in Scranton, including its downtown core, are empty and boarded up, unable to find new tenants.
During the Vice Presidential debate, as a refutation to Senator Kaine’s claim that poverty levels and median income improved nationally from 2014 to 2015, Governor Pence shot back with “…people in Scranton know different.” According to the website of Pennsylvania’s Department of Community and Economic Development, 18 municipalities within the Commonwealth are designated as financially distressed under the Municipalities Financial Recovery Act (also known as Act 47).
Gary St. Fleur
PETITION FOR SCRANTON BANKRUPTCY
We, the undersigned residents of Scranton, draw the attention of the Scranton City Council to the following:
WHEREAS, the City of Scranton has been in financially distressed status since 1992 and reached near complete insolvency as recent as 2012, running reoccurring deficits evidenced by an underfunded pension, sale of public assets, increased debt (estimated at 300 million dollars), increased taxes on businesses, residents, commuters, property, in addition to increased fees on other city services; and
WHEREAS, the excessive taxation of residents, businesses, and commuters has resulted in a reduction of economic prospects for the City of Scranton as well as the destruction of equity for many local homeowners, compounding a disastrous situation that cannot be remedied through additional taxation or the sale of public assets; and
WHEREAS, this further contributes to the diminished economic and civil prospects of the City of Scranton, evidence by the sale and the leasing of public assets (parking garage, sewer authority, parking meters) which diminishes revenue sources to the government in addition to inhibiting the public’s ability to obtain government services without unreasonable cost; and
WHEREAS, we believe that a clear sign that the City of Scranton needs to go bankrupt is that the actions that would have to be taken to service its bonds, guarantees, union contracts, and pension obligations, require an excessive increase in taxes that would further cripple the already diminishing tax base (the population has declined by 50%); and
WHEREAS, the above mentions demonstrates a pressing need for the City of Scranton to go into bankruptcy since its ability to service bonds, guarantees, union contracts, and pension obligations are unthinkable in light of the amount of people in the City of Scranton living on a fixed income, a shrinking tax base, and ineluctability of bankruptcy in the future; and
WHEREAS, the City of Scranton cannot subsist without large infusions of capital from the sale of assets, borrowing, or outside sources, which cannot continue in perpetuity and only increases future debt obligations, which is to say that these conditions are the very reason for the existence of Chapter 9 Bankruptcy, as the City of Scranton has proven without a shadow of doubt an inability to service its debts and is in desperate need of having them restructured; and
WHEREAS, the City of Scranton can only see prosperity and success by lowering taxes for businesses and business owners, residents, and commuters which will attract other businesses to come and thrive in the City of Scranton, leading to a more sustained infrastructure, more economic prospects, more capital work projects, and a growing population, which can only occur through the lessening of the City of Scranton’s debt obligations through bankruptcy; and
WHEREAS, the undersigned individuals do hereby declare and present an initiative according to ordinance of the City of Scranton Home Rule Charter § 10-1003 that will create a law to enforce the will of the people that the City of Scranton files for Chapter 9 Bankruptcy.