How Much Does Scranton Really Owe? ONE BILLION!!!!!!

The narrative coming from Scranton city hall is that Scranton is doing quite well. Is this really the case?

Local Scranton business owner, Damian Biancarelli, brought something to my attention regarding Scranton’s financial condition. He harbored the sneaking suspicion that things were far worse in Scranton than most imagine. With this, we began peering into the financial debt to figure out one question: “How much does Scranton really owe?”

 

This is our analysis

Wells Fargo’s Natalie Cohen did report regarding Scranton’s financial condition last November. In her analysis, she came up with a total debt figure of $519 million dollars. This figure was based on a 2014 audit of Scranton using audited statements provided by SB & Company. In those statements, the city of Scranton is shown having total liabilities of $375 million dollars while only having government assets of $146 million. If that were not bad enough, the city has unfunded potential liabilities that must be accounted for. According to the audited statements, Scranton’s pensions are underfunded across the board with the police plan funded only 33%, the firefighters plan only funded 18% and non-uniform is 29% funded. This creates an estimated unfunded liability of $184 million dollars. Combining these two large figures, $375 million and $184 million, is how we arrive at the $519 million dollar total debt obligation for Scranton.

Is Scranton getting better?

Well, If we take a look at Scranton’s audited statements for 2015, we come to a sound conclusion regarding Scranton’s debts. They are not getting any lower! 2015’s audited statements states Scranton’s total liabilities is $383 million while total assets shrunk to $133 million.  Pension liabilities increased to $195 million bringing Scranton’s complete debt figure to $578 million.  To make matters worse, the pension liability is based on discounted rate of 8%. If the fund slips by a mere 1%, it would increase the pension liability by over $20 million. This would bring the figure to over $600 million.

How much more?

The question really is “is this all that Scranton owes”? The financial analysis needed to really unravel Scranton’s total debt figure is not a simple matter. In fact, if we use audited statements and the data from the prospectus of bond issuances linked to Scranton. We get a number that is too shocking to believe. What if I were to tell you that Scranton’s complete debt figure is one billion dollars? What if I told you that Scranton will never be able to pay back its debt no matter how you slice it? It is hard to believe but here is the proof:

 

Sources: SB & Company, Financial Statements and Single Audit Together with Report of Independent Public Accountants For the Year Ended December 31, 2015  http://www.scrantonpa.gov/business_admin_docs/2015%20Audit%20Report.pdf

As stated above, Scranton’s total liabilities are $383 million. Only $14 million is current, the rest is long term liabilities.

Sources: SB & Company, Financial Statements and Single Audit Together with Report of Independent Public Accountants For the Year Ended December 31, 2015 http://www.scrantonpa.gov/business_admin_docs/2015%20Audit%20Report.pdf

Scranton’s unfunded pension liability is 195 million.

 

Sources: 2017 Scranton Budget Narrative (Provided by City) http://www.scrantonpa.gov/business_admin_docs/2017%20Operating%20Budget.pdf

 

According to Scranton’s recent budget, the city has issues two new bonds- one worth $32.8 million and the other $39 million

Private Placement Memorandum furnished by City of Scranton, Lackawanna County, Pennsylvania in connection with the offering of its $11, 320,000 aggregate principal amount of General Obligation Bonds, consisting of $9,850,000 aggregate principal amount of General Obligation Bonds, Series of 2012 and $1,470,000 aggregate principal amount of General Obligation Notes, Series B 2012 http://emma.msrb.org/EP703224-EP546320-EP947433.pdf

 

Scranton’s shared of the overlapping indebtedness that comes from the county and school district is respectively $65 million and $145.8 million. Scranton has a coterminous relationship with the school district while the county apportions the city’s share based on a 27.1 % calculation.

If the overlapping indebtedness’ interest is factored in based on a 20 year scale with 5.5 coupon, we get a total figure of $145 million for the shared debts interest amount.

 

What happens when we calculate all of these numbers?

 

$383.9 million

$195.2 million

$32.8 million

$39 million

$65.2 million

$145.8 million

$142.1 million

 

$1 BILLION DOLLARS!!

 

What is the share for the tax payer in Scranton?

 

The people of Scranton will owe $46,012 per household and $18,405 per person. In other words, Scranton is never going to be able to pay off its debts!! The fact of the matter is Scranton is stealing the equity and income of its residents only to be bankrupt anyway. How soon will Scranton run out of money? Next Year! #Savescranton

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One thought on “How Much Does Scranton Really Owe? ONE BILLION!!!!!!

  1. The democrats always operate as if they have an endless supply of revenue. The numbers prove they are irresponsible, but their sycophants don’t care. They want their handouts and nothing else matters. Scranton is just one example out of millions. The entire country is headed off a cliff and both parties are to blame.

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