WASHINGTON -- A Pennsylvania mayor has an extreme plan to address his city's budget shortfalls: pay every public employee, including himself, minimum wage.
Scranton Mayor Chris Doherty announced last week his proposal to immediately and indefinitely slash the wages of the city's 398 police officers, firefighters and other public workers, from between $18 and $36 an hour to just $7.25 an hour.
The decision comes at a time when municipalities across the country have turned to austerity measures to tackle mounting debt and protect bondholders. Stockton, Calif., filed for bankruptcy last week, citing over-the-top health care costs for its city employees.
Pushed by Scranton's growing debt and the lack of city council action to address it, Doherty proposed the wage cuts in an effort to balance the budget until the city can secure a $16 million loan. He vowed to reimburse workers their back pay plus interest once the city receives the loan, but many workers have already said that without their normal paychecks, they will not be able to pay monthly bills.
The three unions representing local firefighters, police and public works employees filed a lawsuit Monday against the mayor's plan, citing the "devastating impact" the move would have on workers and castigating Doherty for failing to negotiate wages with union representatives. Under the plan, the average firefighter in Scranton would see his yearly salary drop from $55,910 to $15,080 -- below the federal poverty line for a two-person household.
On Thursday, a motions court judge issued a temporary injunction halting the wage cuts for the pay period ending Friday. Sgt. Bob Martin, the police union president, told The Huffington Post that he was "ecstatic" and surprised at the court's swift action.
There is no money in the city's coffers to pay the workers, however, and the city will have to violate the injunction, Scranton business administrator Ryan McGowan said. Employees will still receive the legal minimum wage in their paychecks for the period ending Friday, but the city does not have sufficient funds to pay more than that, according to McGowan.
"We can't issue a check if the money's not there, so at this point we'd just be paying individuals that minimum wage rate," he told HuffPost. "It's not that we want to violate [the injunction] -- we don't have the funds in the bank."
Scranton is perhaps most famous these days for being the location of the fictional paper company Dunder Mifflin. Its second claim to fame is being the birthplace of Vice President Joe Biden.
Last week, the city had about $3.8 million in unpaid bills, including more than $2 million in unpaid health insurance premiums. A normal two-week payroll costs the city about $1 million, and cutting back to minimum wage across the board will give the city an extra $700,000 each pay period to meet other bills. After paying minimum wage to the 398 employees this week, the city will have just $5,000 in its accounts, said McGowan.
"There's not much else we can cut and continue to provide services to the city, to the citizens," he said.
The unions, however, are not persuaded that slashing wages is necessary. They see the mayor's move as an effort to bully Scranton's city council into approving the tax increase the local banking community, wary of the city's unfunded debt, has demanded in return for any loan. Doherty has asked the council to approve a 78 percent increase in taxes over the next three years. The council in turn has asked the mayor to find another way to increase revenue, proposing cost-cutting measures that the mayor believes won't raise revenue quickly enough. Doherty has gone so far as to sue the council for not carrying out the original budget it put in place, which required a plan to address the debt.
"We're trapped in the middle of a political game between the mayor and city council," said John Judge, president of the firefighters union, adding, "We're not the cause of his problem, and we're not the solution to his problem."
The lawyer representing the unions, Thomas W. Jennings, has the same impression. "The mayor and city council for the last month have been at it. They can't adopt a budget," he said, adding, "We were stuck in the middle. I said in court today, 'I don't know who's right, but I know who's not right -- and that is, whoever is making us the target for their leverage.' That's really what it was about."
Council President Janet Evans also blasted the mayor for his attempt to slash wages, calling the move "disgraceful" according to Scranton's WNEP-16.
McGowan, however, insisted that the wage cuts are a necessity, not a political calculation.
The city council was "fully aware of what obstacles were in front of us to get the refinancing done," he said. "At this point, they've decided they're not going to follow the budget they put in place. There's not much that the mayor can do to change that."
Doherty told the Scranton Times-Tribune that he hoped the cuts would "force a plan to be crafted that's accepted by the banking community."
"I apologize to all employees in the city that have to bear this. This is totally unnecessary," the mayor said. "This is unfortunate, but it dramatizes the seriousness of the situation. As the mayor, I can only deal with the money I have, and until the council funds its budget, this is the way it's going to be."
Judge Michael Barrasse, who issued the injunction, agreed with Jennings that the mayor cannot unilaterally slash pay outside the bounds of the unions' contracts and without any negotiations, according to a law clerk for Barrasse. In his arguments, however, city solicitor Paul Kelly spoke of emergency powers that may allow the mayor to make the cuts. Those arguments and the fate of the proposal will be addressed at a hearing on Friday.
In addition to the lawsuit, the police and firefighters unions wrote letters apprising Vice President Biden of the situation. Biden visited Scranton on Wednesday and met with several union leaders from another municipality. The city has said it is in such dire straights financially that it will ask the Obama campaign to pay for the extra security detail associated with the vice president's visit.
"With Scranton and Pennsylvania being such a hot bed for the next election, we want to make sure that they know there's a Democratic mayor that's not taking care of his public safety unions," Judge, the firefighters union president, said. "We know that President Obama and Vice President Biden have been staunch supporters of police and fire, and we wanted to make sure they were aware of how our unions were being treated up here."
Whether or not the injunction stands Friday, Scranton's mayor and city council will have to look for a longer-term way both to cover the budget shortfalls and to pay employees the wages and interest they are due.
"At some point, tough decisions have to be made, whether it's tax increases or fee increases," McGowan said. "You can't come up with a budget and say, 'Well, maybe this is how we're going to repay you.'"
Martin, the police union president, isn't sure the mayor and city council can reconcile their differences soon.
"There is really no money, so what happens then?" he asked. "That question I don't have the answer to."