Recent PA Supreme Court Decision Proves Tax Case against City of Scranton

The city of Scranton is facing a lawsuit alleging that it has been collecting taxes illegally for the past 5 years. The lawsuit cites Pennsylvania State ordinance Act 511 which places a cap on the amount of taxes that can be collecting on the local level by a municipality. The city of Scranton claims that it does not have to observe this cap because it’s home charter gives it full power to control its rates of taxation. Nevertheless, this claim does not appear to hold water since the home charter is silent on the matter of a cap and defers to state legislation on matters where the home charter is silent. Furthermore, a recent Supreme Court decision proves that the home charter defense is not likely to succeed. In the case City of Pittsburgh v. Fraternal Order of Police, Ft, Pitt Lodge, No. 1 PICS Case No. 17-0861 (Pa. May 22, 2017)  it is stated :

“Municipality could not eliminate subject of collective bargaining through adoption of home rule charter provision where Act  111, which granted fire and police officials right to bargain conditions of employment and took supremacy over any municipal home rule charter. Order of the commonwealth court reversed.

The court held that home rule charters were subservient to limitations imposed by the state legislature, and could not change or modify statues of statewide applications, such as Act 111.

If you take Act 111 and replace it with Act 511 the implications are clear! The city of Scranton has no grounds to argue that it can supersede state ordinances and continue to tax the people of Scranton into oblivion through its illegal taxation. The courts have spoken!

Act 5 11 states:

“The aggregate amount of all taxes imposed by any political subdivision under this section and in effect during any fiscal year shall not exceed an amount equal to the product obtained by multiplying the latest total market valuation of real estate in such political subdivision, as determined by the board for the assessment and revision of taxes or any similar board established by the assessment laws which determines market values of real estate within the political subdivision, by twelve mills.(Act 511)

The lawsuit, or mandamus action, would force the Mayor of the City to obey the law which under Act 511 reads:

Any one of more persons liable for the payment of taxes levied and collected under the authority of this chapter shall have the right to complain to the court of common pleas of the county in an action mandamus to compel compliance with the preceding provision of this subsection. Tax moneys levied and collected in any fiscal year in excess of the limitations imposed by this chapter shall not be expended during such a year, but shall be deposited in a separate account in the treasury of the political subdivision for expenditure in the following fiscal year.

Bond Buyer’s Piece On Scranton Tax Case

SCRANTON, Pa. — A county court on Tuesday heard the city of Scranton’s preliminary arguments against a lawsuit attempting to stop it from tripling its local services tax.
Judge James Gibbons of the Lackawanna County Court of Common Pleas heard from attorneys representing the city and a group of eight taxpayers in his second-floor courtroom in downtown Scranton.
Gibbons gave no timetable for any ruling.
Scranton raised the levy from $52 to $156 for every person working within the city limits that earns at least $15,600. City officials defended the move under Pennsylvania’s municipal planning code and called it essential for the city’s recovery under the state-sponsored Act 47 for distressed communities, to which Scranton has belonged since 1992.
The taxpayer group, led by independent mayoral candidate Gary St. Fleur, is seeking a mandamus action. St. Fleur has said that lowering taxes across the board is the only way for Scranton to revive economically. He has also initiated a ballot measure to force the city to file for Chapter 9 bankruptcy.
Their lawsuit named Mayor William Courtright and business administrator David Bulzoni as defendants.

Full article here: https://www.bondbuyer.com/news/scranton-judge-hears-arguments-over-tax-hike

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Bond Buyer’s Commentary on Scranton Tax Case

Scranton case could ripple far, says taxpayer advocate

SCRANTON, Pa. – A lawsuit against the city of Scranton over taxation could have ramifications throughout Pennsylvania, said the head of a group that initiated the suit.

“State law clearly states there is a cap to taxation through the Act 511 law,” Gary St. Fleur said in an interview at the Lackawanna County Court of Common Pleas in downtown Scranton on Tuesday. “If we do not win, that would allow any city to raise taxes in any amount it wants.”

Full Story Here: https://www.bondbuyer.com/news/scranton-case-could-ripple-far-says-taxpayer-advocate

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Scranton Government Believes It Can Raise Taxes As High As It Wants

The court hearing on Tuesday, May 30th, 2017,  has made it quite clear that the Scranton government has no scruples about taxing the Scranton people into oblivion.

According to a recent article by WBRE:

“Our argument is that there is a limitation out there and the city can only tax up to a certain point. The city is taking the position, as a home rule charter, they can set rates at whatever rate they want including up to 100-percent on certain things and there’s nothing anyone can do about it,” John McGovern, attorney for the residents said.

Activist Gary St. Fleur and several others filed a lawsuit against Scranton’s mayor for what they call the “illegal taxation.”

They point to the year 2015 for example.

They say Scranton took in more than $34 million with its taxes that year, roughly seven million dollars over the potential cap.

City attorney Kevin Conaboy declined an interview after Tuesday’s hearing but in court disagreed that there is a cap at all, saying as a home rule charter municipality, Scranton can impose taxes at whatever rate it wants.

“They’re saying they can do whatever they want, they have no constraints and no boundaries,” St. Fleur said. “That’s not true!”

In court, attorneys for both sides seemingly agreed there is no case like this where a community’s ability to tax has been challenged and questioned in this way.

Residents and their attorney say time is critical.

“We figure that around August or September the city is going to hit that $27 million cap and if we go beyond that date, then again, the city in our position, they’re illegally taxing people,” McGovern said.

There is one important factor to point out.

The taxes used to determine the possible cap does not include city property taxes, just what residents refer to as “nuisance taxes” for residents and businesses.

Scranton’s lawyer is asking for the lawsuit to be thrown out by the judge but Judge James Gibbons did not immediate rule on that request

Full article here: http://www.pahomepage.com/news/lawsuit-involving-scranton-taxes-goes-before-judge/726820978

Recent Financial Article Puts Scranton’s Debt At $1 BILLION DOLLARS!!

Last week, online financial publication Value walk wrote an article concerning Scranton’s debt that contained a startling revelation. According to the piece, Scranton is so deep in debt that it is unlikely that it will ever be able to get its fiscal house in order. The article reads:

The region’s balance sheet nonetheless isn’t pretty:

$383.9 million – 2015 city of Scranton Audited statement$195.2 million – Unfunded pension liability (assuming an 8% return)
$32.8 million  –  New bond offering, Scranton General Obligation Note
$39 million  –  New bond offering Lackawana Health and Welfare authority
$65.2 million – Country school debt
$145.8 million – School district debt
$142.1 million – Shared debt county and municipal school board

When all of these figures are put together, you get total figure of $1 billion dollars. Can the Mayor please tell me again how Scranton plans to pay all of this back? #Savescranton

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