Scranton's desperate solution to budget woes hurt union workers

(CBS News) SCRANTON, Pa. - If you go to the official website for the City of Scranton, Pa., you will see this boast: "The future is here."

Well, city workers hope not because their pay has just been slashed to minimum wage. Scranton is just one of many cities struggling to recover from the Great Recession.

American cities have seen their revenues decline for five straight years. Seventy-two percent of them are making personnel cuts.

Unions, Scranton clash over minimum wage pay cuts

When union workers in Scranton, Pa., opened their paycheck envelopes on Friday, they were shocked to see how small those checks were. Now they're wondering what's next for them and their city.

In this file photo from Jan. 29, 2010, Scranton Mayor Chris Doherty speaks during a debate between the four Democratic candidates for Pennsylvania governor in Harrisburg, Pa.

/ AP Photo/Carolyn Kaster

The fight here has certainly been a difficult time for the City of Scranton. The unions are suing Mayor Chris Doherty and the city in order to stop the pay cuts.

Robert Pugliese has worked for Scranton's Department of Public Works for 26 years. He made $19 an hour.

But last week, his salary -- along with nearly 400 other public workers' -- was cut to minimum wage: $7.25.

I own a house in the city, two children, wife, we have car payments, we have house payments," Pugliese said. "We have utility bills. We have to pay them all, and it's not going to be easy to do on this kind of money."

Scranton faces a $16 million dollar budget gap. Mayor Chris Doherty proposed either a 29 percent tax hike (a 78 percent hike over three years) -- or drastic cuts.

"We don't have enough money. That's what it comes down to. We're trying to balance how we get through this," Doherty said.

Doherty said after paying the workers minimum wage, the city had just $5,000 left. He says he had few options.

"We probably would've lost the gas and the diesel for our police vehicles, our fire trucks. ... We probably wouldn't have been allowed in the landfill to dump our garbage."

So he sent out a letter telling workers the cut would be for the "foreseeable future."

Union worker Robert Pugliese's $19/hour paycheck was cut to $7.25 because as Pa. city struggles to address $16 million budget gap

/ CBS News

Although he could make more on unemployment, Robert Pugliese is still showing up to work, hoping city leaders find a solution soon.

"It's sad that it came down to this," he said. "I can't understand how it could get this bad. I could never run my household down this low. I don't know how they could run city down this low."

The unions are suing the mayor and the city to stop the pay cuts, and last week a judge ordered the workers be paid full wages. Now the unions want the mayor held in contempt.

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[wolves158]

Several States AND Cities Refusing to pay Pension Obligations THEY entered Freely into, To Rip-off Loyal Police and Fire Retirees, BUT, They STILL have BILLIONS Of Tax Dollars to GIVE TO ILLEGALS in FREE Social Services, free Schooling, Free Emergency room and Health Care....Search the Internet for how many MILLIONS AND BILLIONS of tax dollars are spent on ILLEGALS by the SAME CITIES!

[lounsburyp]

So the Mayor, a Democrat btw, is taking drastic measures in a very important swing state that just happens to fit nicely with Obama's redefinition of concepts like "fair" and "the rule of law" and his class warfare campaign. You want to know why Scranton is where it is? Follow the money. The only reason the press isn't is that they already know the answer... decades of control by tax and spend liberals have finally brought them to the point where something's gotta give. And just like the lefties of Greece and Spain who want to continue to vote themselves more money, well here we are thinking... "Not us, that won't happen to us". We deserve what we get.

[alanafterdark]

Dear Friends,
The Mayor is employing "The radicalization of Truth" which is a foreign concept to most American politicians. I feel that since the United States carries a multi-trillion dollar debt, all Federal Workers including The Supreme Court, Senators, Congressmen, as well as the White House should be on minimum wage until the debt is cleared. If millions of Americans are living on minimum wage... why not all Government-Federal and State employees alike. This would change the paradigm between Government jobs and the private sector... which is in need of a good adjustment. ALAN

[cfredc]

This segment was so deceptive that it is fair to call it a lie

The fact is that the Mayor has promised that all affected employees will receive all of the withheld pay.

Oooh.

[Syn1]

The newYorkTimes coverage is far more in depth on this. They are 3.8m behind on the bills. Debts include 2m in back insurance payments. Soon Possibly no Fuel for Police/Fire/City vehicles, No Water and the landfill is ready to start refusing the cities garbage they are so far behind.

Payroll prior was over 1M every 2 weeks, with this change it's now 300k every two weeks, but that still only left 5K in the payroll account.

That mayor would have to fire 2/3 of the city staff to maintain the old original per hour rates.

[jrasingh]

So what was the mayor making before the cuts? What is he making after the cuts? What about other city officials? These are the answers we want in the interviews. If the cuts are across the board, it is acceptable. It is not acceptable to ask people who risk their lives to shoulder the brunt of the cuts when others continue to earn the same or even get pay raises and bonuses.

[Syn1]

The mayor reduced his wages to $7.25 an hour as well. The cuts were completely across the board. The janitor is making the same as the police chief now.

[sdkeller]

I didn't read anything saying that the mayor would cut his own salary down to minimum wage. If he expects cops and firefighters to risk their lives for the good of the community for minimum wage, then he should be willing to sit behind his desk for a lot less. Does anyone know how much he makes a year?

[Syn1]

The New York times has reported the mayor's wvwn cut is wages to the same $7.25 per hour.

[melmiller55]

Scranton problems was and is little, small time council members making decisions they are too inept to make and paying for Hilton's parking garage. Union bashers ought to start bashing the real culprit, when they see Niki and Paris Hilton spending the dough from their offshore accounts on TV and not teachers, fire fighters or police officers. Scranton city council members sanctioned a bad deal to give a multi billion dollar company a break. "Scranton's version of a debt crisis began when a local parking authority said it couldn't make a bond payment coming due in June, calling on the city's guarantee. The authority had issued bonds to finance parking garages that the city had used in a campaign to woo Hilton Hotels and Resorts to operate a conference center downtown. Each time the authority issued more bonds, the city backed them with a powerful "full faith and credit" guarantee. But by 2008 the authority had $54 million in bonds outstanding, and was spending about 60 percent of its budget on debt service — so much that it could not cut parking rates to compete with cheaper parking lots nearby. A majority on the City Council refused to honor the guarantee, saying the authority's finances were in disarray and they wanted to strike a blow for fiscal rectitude. Suddenly, Scranton, which has been in dire fiscal straits for years, was a pariah. Only one bank had been willing to help it raise money, and it backed out of a $16 million deal to provide short-term financing. Without that cash, the mayor said Scranton couldn't make its next payroll. The city's fuel supplier threatened to halt deliveries of gasoline, which would idle the police cars and garbage trucks. More than a dozen other vendors cut off the city's credit."