St. Fleur’s Response To City Of Scranton’s Attempt To Appeal Tax Case

Press release:

For Immediate Release

Yesterday, Attorney John McGovern representing Mayoral Candidate Gary St. Fleur and the seven other Scranton Residents gave an answer to the on going tax lawsuit against the City of Scranton. The answer is in response to the city seeking to appeal its devastating lost early August regarding a lawsuit brought against the City of Scranton over excessive taxation.

In the answer, the plaintiffs argue that the Judge is correct in his prior ruling and that the court should immediately seek to execute the remedy stated in Act 511 which would disallow the city of Scranton from collecting taxes on the local level for the remainder of the year- being that the city of Scranton is currently over the Act 511 cap.

The court trial  that finally decides this case will occur at 8:30 am on Monday, September 11, 2017 in Lackawanna County Courthouse, fourth floor, 200 N Washington Ave, Scranton, PA 18503. “Every tax payer in Scranton needs to come and see how the city of Scranton is squandering the good people of Scranton’s hard earn money by attempting to prove it has a right to steal from the people of Scranton through illegal taxation,” says Gary St. Fleur.  “Mayor Courtright should be ashamed of himself! If the city needs to illegal tax to operate the government than it has a serious spending problem and needs to cut spending in addition to lowering taxes across the board!.”

The City of Scranton is currently over the cap and is expected to exceed the cap by $10 million according to its current budget. Mr. St. Fleur wants the courts to put a stop to this immediately.

 On August 4th, Judge Gibbons ruled against the city in early preliminary hearings, throwing all the city’s objections regarding the Act 511 lawsuit (here).  The suit contends that the City of Scranton has been illegally taxing the people of Scranton by increasing local taxes pass the state limit.

The state limit is imposed by an ordinance entitled Act 511 that places a cap on the amount of taxes that can be raised on the local level. The cap is determined by taking the value of the properties within the municipality and multiplying them by 1.2 percent.  The suit was filed against the city of Scranton in March 1st through a mandamus action which sought to force the government of Scranton to observe the cap and reduce tax accordingly. The city of Scranton has argued that since it is a home-rule charter it does not have to obey the Act 511 State law. Judge Gibbons, who oversaw the hearing, disagrees.  In his eight-page ruling, he explains that the home rule charter of Scranton is subservient to state law and thus the cap on Act 511 taxes “cannot be superseded by the home rule charter law.”

The city of Scranton had twenty days to respond to the defeat and did so on August 22nd. In their response, they alleged that the city of Scranton does not have to observe Act 511 because of its home rule charter and can thus raise taxes as high as possible. The city requested the judge reconsider his earlier ruling. They also requested that the case be thrown out because it is causing distress to a cash strapped city.

“I agree that the case should be dealt with immediately since it has been proven that the city has been stealing tax money from the good people of Scranton”, Says Gary St. Fleur. “Wasting tax payer’s money in order to continue to illegally collect taxes is heinous and offensive!!”

Mr. St. Fleur, who is also running for Mayor of Scranton, has been adamant that City of Scranton taxes are far too high and that the city needs to file bankruptcy. “This victory demonstrates that Scranton financials are so dire that they must illegally tax to make due.  This case forces the city to confront the reality that they have run out of time and that the Scranton tax payer cannot bail out the city of Scranton.”

The statutory law in question specifically 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.

Act 511 bases the cap on a formula that includes the value of the properties in the municipality multiplied by 12 mills- a mill being one of one thousand. Scranton Mayoral Candidate Gary St. Fleur explains, “The legislation is written to protect citizens form excessive taxation. If home values are plummeting then that is a sure indication that the people are becoming poorer. It would be unconscionable to continue increasing the levying of taxes on an already impoverished people.”
St. Fleur contends that the City of Scranton is in severe financial distress and there is practically no recourse left except for the government to file for Chapter 9 Bankruptcy. He has also initiated a ballot measure to force the City into Bankruptcy. A Wells Fargo report from October 2016 explains that a 2014 audit of Scranton revealed $375 million in liabilities and $184 million in unfunded non-pension post-retirement benefits to government employees. The City has had to sell various public assets, such as the sewer authority ($195 million), and issue bonds (that are rated as junk’ status by rating agencies) in order to sustain adequate revenue stream. Mr. St Fleur is adamant that lowering taxes across the board is the only way to Save Scranton from its economic depression. Bankruptcy would lessen the cities financial burdens, making lessening taxes possible.


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Bond Buyer’s Coverage Of Moody’s Report On Scranton

By Paul Burton

Published August 22 2017, 2:16pm EDT

A court ruling that restricted Scranton, Pa., from collecting certain taxes under astate law is a credit negative for the distressed city, said Moody’s Investors Service.

“It may reduce tax revenue, which is a vital funding source for the city’s operations,” Moody’s said in a commentary on Monday.

Judge James Gibbons of the Lackawanna County Court of Common Pleas issued a preliminary ruling Aug. 3 against the city after a group of eight taxpayers, led by mayoral candidate Gary St. Fleur, challenged Scranton’s ability to levy and collect certain taxes under Pennsylvania’s Act 511, a state local tax enabling act.

The ruling affects whether the Home Rule Charter law supersedes the statutory cap contained in Act 511.
The city has filed a motion for reconsideration and this week asked the court to enable it to appeal to the Commonwealth Court of Pennsylvania.

A message seeking comment was left with Kevin Conaboy, the attorney representing Scranton.

Scranton, the 77,000-population county seat, is working toward exiting state oversight under Pennsylvania’s Act 47 workout program for distressed communities, under which it has operated since 1992.

Moody’s does not rate Scranton. S&P three weeks ago upgraded the city’s general obligation rating to a still-junk BB-plus, citing revenue from a sewer-system sale.

S&P, which assigned a stable outlook, cited the city’s improved budget flexibility and liquidity, stemming largely from a sewer-system sale that enabled it to retire more than $40 million of high-coupon debt.

The city also suspended its cost-of-living-adjustments and intends to apply a portion of sewer system sale proceeds to pension funding.

“These positive steps have been important for paying off high interest debt and funding the city’s distressed pension plans,” Moody’s said. “While these one-off revenue infusions have been positive, Scranton faces an elevated fixed cost burden of over 40% of general fund revenues.

“Act 511 tax revenues are an important revenue source for achieving ongoing, balanced operations, particularly as double-digit property tax increases have been met with significant discontent from city residents. The potential loss of Act 511 tax revenues comes at a time when revenues for the city are projected to be stagnant through 2020.”

Scranton has struggled in the capital markets since 2012, when its City Council skipped a $1 million bond payment during a political dispute. The city has since repaid the debt.

“If the city cannot balance its budget without illegally taxing the Scranton people, it is absolute proof that the budget is not sustainable,” St. Fleur said. “Scranton has sold off all its public assets and raised taxes excessively with the result being a declining tax base and unfriendly business environment.

“The city needs to come to terms with present economic realities by cutting spending and lowering taxes. This is the only option for the city.”

St. Fleur has said the city should file Chapter 9 bankruptcy and has pushed for a related ballot measure.

Read more…

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Recent Moody’s Updates Scranton Financial Health In Light of Act 511 Court Ruling

Today, Moody’s has released a report stating that the recent ruling against the city of Scranton regarding Act 511 could mean dire consequences for the city(lower taxes for residents!)(more info). The report explains that the city collects 1/3rd of its revenue from act 511 taxes, these are all local taxes outside of property taxes. If the court ruling prevails, Scranton will not be able to continue its operations without any new revenue sources. Then again, Scranton can always cut cost and decreasing spending. Everyone makes due with the budget they have. Scranton must do the same!!!

CUT SPENDING

The city of Scranton makes the argument that it cannot make any cuts but this is rather dishonest assessment. The city could decrease employee salaries, create new programs such as moving the fire department into a voluntary unit or make technological upgrade to decrease the amount of administrative staff. Departments can be streamlined and waste can be curtailed. The people of Scranton are not responsible for the lack of fiscal responsibility demonstrated by the city of Scranton. The people of Scranton are also not responsible for bailing out the city from its financial mess. The good people of Scranton need their income to improve their homes and theirs lives, which is fundamental to increasing economic activity the city sorely needs. The city has 50% of its retired policemen on disability and 58% of its retired firemen on disability; I am certain that there are adjustments that could be made to these ranks of disabled former employees if they are currently working elsewhere. In addition, if there are pension payments due to spiking (employees working overtime to increase their pension payments) this also can be changed. Scranton needs real leadership!- Someone who is not willing to sell the people of Scranton out to private interest. #SaveScranton #GaryForMayor

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Judge Gibbon’s 8 Page Order Against Scranton Government!!

ALL the City’s OBJECTIONS Overruled!!!!!!!!! There only defense was that their home charter protects them from state law Act 511, but Judge Gibbons Ruled:

“Because Act 511 is a uniform statue applicable throughout the commonwealth we conclude that
its statutory cap cannot be superseded by the Home Rule Charter Law.”

In other words, the Scranton government is subject to the cap and is going to have to pay up!!!!!!!! More info here

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Recent Bond Buyer Article On Scranton Lawsuit defeat

August 9, 2017

A Lackawanna County, Pa., court has ruled that Scranton’s home-rule charter does not supersede a state cap on tax collection.

Judge James Gibbons on Aug. 4 rejected Scranton’s preliminary objection to a lawsuit by a Scranton taxpayer group that opposed the city’s tripling of a local services tax.

The case is still pending. Losing it could cost the distressed city millions of dollars.

“The arguments of the defendants are not persuasive,” Gibbons said in an eight-page ruling. “Additionally, we believe the complaint is specific enough to apprise the defendants of the nature of the claims against them and to prepare a defense.”

Gibbons heard arguments on the city’s motion May 30.

Courtroom debate involved the primacy of Pennsylvania’s Act 511, a so-called local tax enabling act. The lawsuit by eight taxpayers, filed March 2, contends Scranton has been collecting taxes beyond the legal limit and called for the issuance of a mandamus against the city.

City attorneys, meanwhile, say Scranton has a home-rule charter and is not subject to a cap.

Scranton, a 76,000-population county seat, raised the levy from $52 to $156 for every person working within the city limits that earns at least $15,600. 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.

“This is a major win for the taxpayers of Scranton that have been beset by mounting taxes and fees from the cash-strapped Scranton government,” said Gary St. Fleur, the leader of the taxpayer group and a Libertarian challenger to Democratic Mayor Bill Courtright.

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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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