Analysis, discussion and opinions by members of Newsday's editorial board.
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Scranton's financial earthquake could be felt on Long Island
You can see Scranton from Long Island.
Okay, maybe not physically, but Nassau and Suffolk counties can certainly relate to the fiscal earthquakes shuddering through Northeast Pennsylvania that made international news recently when the town's mayor issued paychecks giving every single city employee $7.25 per hour for the work done during the previous pay period.
Scranton Mayor Chris Doherty announced on June 27 he would cut all pay to minimum wage because Scranton on that day had $5,000 in the bank, and payroll of $1 million every two weeks. Unions for police officers, firefighters and other municipal workers immediately went to court looking for an injunction to stop Doherty from issuing the shorted paychecks, and won. Last Friday, Doherty sent out the diminished salary packets anyway.
His argument is that no number of injunctions, laws or protests can put enough money in the bank to pay these bills.
More importantly, absent serious changes, no bank would loan Scranton the money to pay them, because they'd have no confidence the city would ever be able be able to pay them back.
Scranton has a legal obligation to pay union workers what their contracts stipulate. Unless it goes bankrupt. And therein lies the real strategy for Doherty: he's going to be ordered to pay bills, these paychecks, which he cannot pay. That will take the city into bankruptcy court, which could do the one thing he cannot: dissolve those union contracts.
Scranton's economy, and the economy of that whole region, has been sliding downhill for decades. It is a vicious cycle, in which the less vital the economy gets, the higher the tax burden gets for every earner and property owner. In the meantime, most of the good jobs are with the school districts or municipal governments, so there's no one to pay the taxes, and no one to pay good wages but the taxpayers.
When towns in California like Stockton and San Bernardino file for bankruptcy it feels, here on Long Island, like a crazy West Coast concept. And Long Island, adjacent to the economic engine of New York City, is not exactly Scranton. But it does face serious economic challenges, as do Yonkers, and Rockland County, and so many area governments, New York City economic engine or not.
We are not Scranton, and our financial situation is not as bad as Scranton's. But we can see it from here.