In Scranton, Pennsylvania workers fight drastic wage cuts

Reuters News
Posted: Jul 10, 2012 6:34 PM
In Scranton, Pennsylvania workers fight drastic wage cuts

By Hilary Russ

(Reuters) - Firefighters, police officers and public works employees in Scranton, Pennsylvania sued the city on Tuesday after the mayor slashed pay for the city's workers to the state's minimum wage of $7.25 an hour.

Christopher Doherty, mayor of the cash-strapped city, cut the pay of nearly 400 city workers on July 6 in an effort to meet payroll costs.

Doherty, who did not return calls seeking comment, cut his own salary as well as those of the City Council to the state's minimum wage.

Three public sector unions, which under state law are not allowed to strike, launched two federal suits and filed a motion in state court.

One complaint accuses the city of violating the Fair Labor Standards Act, while the other claims the city gutted benefits without notice or a hearing for police and firefighters disabled in the line of duty.

Separately, the unions also asked a state court to hold Doherty in contempt. They had sued in state court on July 2 to try to stop the pay cuts from going into effect. A local judge ordered Doherty not to implement the cuts, but the mayor did so anyway.

"It's an economic disaster to them and their families," said Thomas Jennings, an attorney for the unions. He said the judge could ultimately order the mayor jailed.

Jennings also said the wage cuts were the result of a budgetary dispute between City Council members and the mayor.

"As a consequence, my clients -- who fight the fires, arrest the bad guys and fix the potholes -- are stuck in the middle," he said.

City Council President Janet Evans did not reply to requests for comment.

The unilateral pay cut was imposed with just eight days notice, according John Judge, president of the International Association of Fire Fighters Local Union.

"Our guys can't live on $7.25 an hour. They have families to raise," Judge said.

With firefighters making an average of about $22 an hour, according to Judge, the pay reductions slashed their wages by two-thirds.

Doherty cut wages because of the city is nearly broke. On Thursday, it had $5,000 in cash, the Scranton Times-Tribune reported.

The city's business administrator told the newspaper that Scranton is facing a projected $16.8 million budget deficit for fiscal year 2012.

Scranton, a city of about 76,000 in the northeast of the state, is the latest U.S. city in financial turmoil amid sunken revenue collections, lowered state aid and increased pension and other costs.

Some of the Scranton's current problems also stem from the $52 million in bonds it guaranteed for the Scranton Parking Authority, according to credit rating agency Moody's Investors Service, which does not rate the city.

The city delayed a payment of $1 million payment, originally due on June 1, by two weeks to cover the bonds, raising doubts about the city's willingness to make timely payments, Moody's said in a comment.

The $52 million represents more than a third of Scranton's general obligation and guaranteed debt obligations, Moody's said.

Despite the delay, the payment could help Scranton borrow money for operating expenses through the end of the year with short-term cash flow notes, Moody's said.

The bond attorney for the city and the parking authority declined to comment.

(Additional reporting by Mark Shade and Lily Kuo; Editing by Leslie Gevirtz)