Stephen Moore, Investors Business Daily Online, recounts the latest in the Scranton, Pennsylvania, bankruptcy debacle, brought on mostly by generous pension packages negotiated by union officials.
The city also increased various fees, such as for garbage collection, by two-thirds. It’s becoming a tax hell.
These taxpayer costs are skyrocketing because the city’s auditors calculate that the police and fire pension funds will be completely depleted in three to five years.
The local Times-Tribune newspaper reported this week that “pensions increased by as much as 80%” after a court order in 2011 awarded millions of dollars of added pensions to firefighters and police officers.
This is a town that has been struggling for years to pay its bills. As the Times-Tribune notes: “The increased pensions come at a time when Scranton, in distressed status since 1992, is struggling to survive (and faces) a $20 million deficit.” City officials admit that to pay these lucrative pensions will mean less money for schools, public safety and infrastructure needs.
Finances are so tight in Scranton that late last year the city auditor advised city agencies that “only in the event of an extreme emergency can a purchase be made . . . This is a serious matter and your cooperation is expected.”
So now homeowners are getting squeezed on basic city services as they pay ever-escalating property taxes. What a deal! Don’t be surprised as more leave Scranton, further depleting the tax base.
And who would want to move there now?
When the mayor requested that the unions help keep the city afloat by renegotiating these soaring pension costs, the answer from militant “public service” union leaders was: Hell, no.
One option is for Scranton to take the Detroit route and declare bankruptcy. This is also what several California cities, such as Vallejo, have had to do.
The California Policy Center notes that this option has the virtue of “forcing the unions to renegotiate and take a haircut.”
If that doesn’t happen, cities like Scranton, and many more working-class towns, will continue to raise taxes at a time when families are already walking a financial tightrope.
Middle-class private-sector workers pay higher and higher taxes to fund public-sector pensions that, as the Manhattan Institute has shown, are often twice as generous as what most workers will receive themselves.
The money for supersized pensions isn’t going to come from millionaires and billionaires like Bill Gates or Warren Buffett.
It’s coming right out of the paychecks of working-class America.
Nor is the crisis going away.