The morons running the state capitol of Pennsylvania – Harrisburg – already had to file bankruptcy due to their incompetent management of city finances. Now the brain surgeons running the city of Scranton have decided that dramatically raising taxes and fees on the elderly, poor population of Scranton will solve their budget woes. The government pension obligations haven’t even really kicked in yet. The required pension payments for government workers will skyrocket in the next three years. The real unemployment rate in Scranton is north of 15%. Businesses have closed. The population has declined by 7.5% since 1990. It is a decaying, dying city with only the college supporting the few remaining residents. The government drones running Scranton and other towns across PA are delusional if they think they can raise taxes and fees on aging and unemployed people with no income to pay the bloated pensions of government workers. Math is hard for idiots. Scranton will declare bankruptcy. Book it Dano.
Scranton Residents Plead for Bankruptcy vs. Higher Taxes; Different Than Detroit
City officials in Scranton Pennsylvania have ignored pleas from residents pleading for bankruptcy.
Instead, the city raised property taxes and trash fees nearly 60% and tripled rental registration fees. The city’s school district, which faced a $4-million deficit, raised taxes 2.4%. The City Council, which in 2012 passed a 5% amusement tax on live entertainment, is now discussing a 10% drink tax.
As a result, taxpayer who can are fleeing the city.
The LA Times reports For Scranton residents, bankruptcy is an inviting option
When Detroit filed for bankruptcy, hundreds of residents took to the streets to protest what they saw as a drastic approach to fixing the city’s budget problems.
But in this hilly town of 76,000 in northeastern Pennsylvania, residents have a different view of Chapter 9: They want the city to declare bankruptcy. And soon.
“The silent majority would like to see bankruptcy,” said Bob “Ozzie” Quinn, president of the Scranton and Lackawanna County Taxpayers Assn. “Basically, it’s down to a point where people cannot afford to pay the taxes and are moving out of town.”
The City Council, which in 2012 passed a 5% amusement tax on live entertainment, is now discussing a 10% drink tax. The city’s parking authority is in receivership, and it recently privatized its parking meters: The company in charge upped rates and extended meter hours to 6 p.m., which bar owner Mert Gavin says has motivated workers to skip happy hour and head home to the suburbs straight after work.
“I am one of the last two bars that’s still downtown. Tink’s is gone. Whistle’s is gone, Banshee’s is gone, Molly Brannigan’s is gone,” said Gavin, who runs Mert’s. “Do they expect I’m going to bail the city of Scranton out myself?”
The taxes are especially egregious to some because so many of the city’s residents are elderly and living on fixed incomes. The median household income in Scranton is $37,000, and nearly one-fifth of residents live below the poverty line.
The city’s financial problems were accelerated by a 2011 Pennsylvania Supreme Court decision that found that the city owed its police and firefighters unions back pay — about $21 million. The settlement money became due in 2013, but the city bickered over how to come up with the funds for so long that Moody’s warned in November that Scranton faced the threat of default.
“It’s been nonstop. They raised the water fees, the electric, the gas,” said Richard Laytos, a Scranton native who moved back to the city to retire in 1997 after 44 years in New Jersey.
Gary Lewis, who once ran a blog, scrantonisbroke, that urged city leaders to consider bankruptcy, took a drastic step when they failed to do so: He moved out of the city where he’d spent his whole life.
“I did the math — realized how much it was costing me to live in the city,” said Lewis, who now lives in Indiana, where he says he makes $2,500 more a year because of lower taxes. “That’s the story of my generation. There’s a lot of kids like me, who grew up, went to college at Scranton, but they turn 22 and move out of the city, and they don’t move back because it’s not a financially attractive proposition.”
bankruptcy won’t solve the city’s financial woes, said John Judge, president of the local firefighters union. “It’s a horrible idea — you take local control out of the hands of policymakers, and put it in some judge’s hand,” he said.
Neither the city’s new mayor nor his predecessor, Chris Doherty, returned calls for comment, but former City Council President Janet Evans said she and Doherty had been determined to avoid bankruptcy.
“We are in a different situation than Detroit,” she said. “We were willing and able to do everything within the scope of our authority to continue the recovery of the city of Scranton until it sits once again on sound financial ground.”
My Thoughts
Officials in city hall are either complete financial-morons, beholden to the unions, or beholden to their own pension plans that would take a hit if the city declared bankruptcy.
I suspect a combination.
Different Than Detroit
“We are in a different situation than Detroit,” says former City Council President Janet Evans.
Indeed.
Detroit is better off.
In bankruptcy, Detroit has a chance to dump union contracts and onerous pension promises. Detroit may have hit bottom.
The economic-jackasses in Scranton are going to extract every ounce of blood they can from taxpayers, then eventually declare bankruptcy anyway.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/#haqG652sif7qBjSY.99
I live in a similar sized city, albeit with drastically reduced taxation. Still, every year we vote on taxes getting raised. Every year they get passed.
I used to go in front of the City Council to speak my piece. It doesn’t matter. They know they aren’t getting voted out, and they also know that the people want higher taxes.
I don’t know who exactly wants the higher taxes, but this shit keeps passing.
This is why, despite the fact that I own my house outright, I consider it an “expendable.”
I must “rent” it from the county each year, and the local political clowns could choose to rob me into bankruptcy if they deem it “a good idea.”
The neighborhood could become dangerous.
The nuke plant 20 miles away could spring a leak.
The county highway robbers could up my taxes to insane (from current punitive) levels.
The country could go “full Stalinist.”
Any of these reasons could force me to abandon my house. This is why I think spending a ton of money on a big house is a very risky act.
Property taxes are a massive threat to real estate values. In Illinois at least, even when home prices drop, net taxes stay the same or STILL rise.
I look at the tax bills on homes in places like Naperville or Schaumburg. People are on the hook for $12,000 up to like $20,000 in tax every year in perpetuity. If they have a mortgage too, I can’t even imagine their monthly payments.
One minor hiccup in their two-income employment situation and they’re SCREWED.
I think that when this antebellum period finally ends and the economy rolls over into a vertical dive, it will eventually be the property tax debacle that turns all these uppity suburbs into wastelands.
OT, on the futility of trying to influence politicians to “do the right thing.”
Written by Robert Higgs, as posted to the LRC blog: http://www.lewrockwell.com/lrc-blog/
By the time I began to write op-eds regularly, however, I knew that this assumption is false.Giving advice to the prince as to how he might alter existing policies in order to better serve the general public interest flies in the face of everything the ruler learned from Machiavelli or, to equal effect, from his common sense and experience as a successful politician. The ruler and his bureaucratic flunkies have no interest whatsoever in serving the general public interest, so they have no interest in anything I or anyone else might tell them about how to do so.
Likewise the rich campaign financiers and special-interest groups that prevail on the rulers with some effect are interested only in their own gains. One and all – rulers, flunkies, and key supporters alike — know how to do what they are trying to do; their current policy proposals demonstrate whose ox they seek to gore and whose bank account they seek to fatten. The ebb and flow of visible politics and the mainstream news media’s reports of political events represent only the surface of the rulers’ intentions, the spin that each political party aims to put on his grasping for power and pelf. In this ruthless reality, the rulers neither need nor seek my advice. My op-eds — and yours, too, for that matter — could not be any more irrelevant to them. In short, the worst thing about writing op-ed articles is knowing from the start how futile the effort really is.
Picking on people who are least likely to fight back. Bullies. True to their form dedicated to the socialist idea.
“Property taxes are a massive threat to real estate values. In Illinois at least, even when home prices drop, net taxes stay the same or STILL rise”
Great point. I’m glad I’m not the only one suffering under the weight of socialistic taxes in the socialist state of Illinois. People can’t sell their houses where I live, it’s a dead-end destination, because property taxes are so high. When property values plummeted during the housing crisis, property taxes went up, and continue to go up every year although nobody call sell their houses. I’m renting my house from the country, it’s as simple as that. I don’t pay my taxes/rent, and I’m on the street. If ever there was a reason to hang people, it’d be because of property taxes. Very few things in life piss me off worse.
Michigan has six major taxpayer funded public servant pensions to pay for.
Legislative pension, State Police pension, State Employees pension, Public School pension, Judges pension, and Military pension.
All told the teachers pension is the worst of the bunch and only funded to 64.7%, and in the hole $22Billion, not good at all. The MEA has a deficit of $10 Million and must raise teacher dues to the max, and that won’t be enough. These fuckers spend like there is no tomorrow and they have no idea how close that day is.
In total Michigan taxpayers are on the hook for over $31 Billion, again, not good at all. These pensions come with a promise of a 8% return every year no matter what the market does. That is not only amazing, but as we know is unsustainable. Michigan has maybe 9 million tax paying workers.
Those on the dole scream a promise was made. But who made the promise?
We are supposed to have a representative government, union leaders sat down with a political party leader to make that promise in exchange for votes, and the people voted. Where was the taxpayer at this meeting, where was our representation?
Nice job.
“Wonder is the beginning of wisdom.”
-Socrates
If I were collecting a taxpayer funded pension, I would start to wonder.
My wife and I write off any notion that she’ll get her “teacher’s pension.”
School officials, politicians and Teachers’ Union officials for decades promised “gold plated” pensions as a form of deferred compensation. Instead of demanding whatever the market would bear for compensation Up Front, teachers naively accepted promises of candy-crapping unicorns to be delivered by their political rulers in some future time.
It was STUPID, but all levels of society embraced the lies, obfuscations and illusions.
For the record, I also consider my pensions (I’m vested in two of them) complete write-offs. By the time I reach “retirement age” the coming wave of collapse will have wiped them out entirely.
The future everyone believes promised them is a castle in the sky, visible only in moonlight and under a haze of optimism.
When the hard light of reality dawns, all of it will evaporate.
card802, if I were dependent upon a public employee pension (or any other system managed by others) I’d be crapping my shorts.
Just remaining relatively solvent over the next few years is apt to be extraordinarily challenging. All pension systems are (by law) operated under a given set of assumptions. I believe “business as usual” in the next few years will lead to catastrophic losses, and only what look like “crazy, bomb-shelter” kinds of wealth preservation strategies hold any hope of avoiding poverty.
When stocks, bonds, real estate and insurance plans all get creamed by an implosion in credit, every conventional approach to “saving” will likely tank.
@card, and those numbers are only true as long as the Dow remains in its elevated territory.
With any return to normalcy, the underfunding will rear up and drown us.
Now throw in the O’care debacle and the reality that by 2020 our state budget will have to triple to pay for healthcare alone.
Well Scranton I see you are pulling out the Detroit leaders’ playbooks and following.
Detroit tried increasing costs and taxes to pay for things they can’t afford. It created a city of shacks with few, to no, jobs for anyone of any education level.
As for “voters,” it is evident that most of the FSA does not vote – with the exception of the elderly. The small businessmen vote, but are continuously outnumbered by those that don’t pay, and the unions – at least in Michigan – not only run the elections, they are given the paid time off to actually vote in them.
Voting is a joke, running for public office is a joke.
I’m now of the mind that moving to an unincorporated area and attempting to go off grid and figure out a way to stealthily grow food (so that the gubment can’t see it) is about the only way to hope to find a way out of the disaster.
Sadly, I don’t see that happening for me. But I continue to visualize and pray that it happens. It seems to be the only hope my wee ones have.
“Great point. I’m glad I’m not the only one suffering under the weight of socialistic taxes in the socialist state of Illinois. People can’t sell their houses where I live, it’s a dead-end destination, because property taxes are so high. When property values plummeted during the housing crisis, property taxes went up, and continue to go up every year although nobody call sell their houses. I’m renting my house from the country, it’s as simple as that. I don’t pay my taxes/rent, and I’m on the street. If ever there was a reason to hang people, it’d be because of property taxes. Very few things in life piss me off worse.”
Blame your neighbors for the property taxes. Such things only exist, as you know, with popular consent, and the whole notion of local property taxes is to get other people to pay for services you want to enjoy, but don’t wish to pay full price for.
10 people live in a very small town. 9 of them decided they want sidewalks for all 10 houses, and they “vote” to give the bill to the 10th guy who has the biggest house.
Welcome to politics 101.
dc, just reading what you wrote makes me crap in my pants. What is a crazy bomb shelter type of wealth preservation?
@ TheresaE, I think we all believe a major “reset” is heading our way.
When the Dow craters and the value of $62 trillion in USD-denominated debt gets cut by 20%, then 50%, and then 80%….almost everything that has grown up these past 80 years (and thereby looks “permanent”) will be swept away as by a massive dam break.
Here today, gone tomorrow.
I expect the process to be absolutely chaotic, often horrifying and personally costly, but I look at the “radar” and see this storm approaching and it doesn’t matter what I think of it.
It’s going to come, it’s baked into the cake, and the variables that matter (yet are unknown) are WHEN? and (in the details) HOW?
er, sorry— “TeresaE”
Some of you fine folks up north should seriously consider selling your homes and moving south. I live in a well-maintained condo complex on the east coast of Florida and I own a nice 738 sq ft, 2 bed/2bath apartment. My total ANNUAL property taxes (after filing for primary residence as a senior) is $291.83.
No, I’m not making this stuff up. Florida also has no state income tax.
If your taxes are the same or rising while your property value is falling you can petition your local property tax office for a reassessment. http://tax-taxes.knoji.com/how-to-get-your-property-taxes-reassessed/
The Costs of Austerity: Squandering $2.3 Trillion Yearly of our Productive Resources : http://www.huffingtonpost.com/jakob-von-uexkull/costs-of-austerity-2-3-trillion_b_4595644.html
The meaning of the term austerity has undergone a significant transformation. It was originally used in Britain during the Second World War when the challenge was how to maximize the output of war materials and how to ration popular consumption.
The “modern” version of austerity began in the western industrialized countries during the mid-seventies, and has been continued at irregular intervals until today. Modern austerity is deliberately created, justified by the need to reduce government debt and fight inflation. Modern austerity policies generate artificial scarcity, rising unemployment and idle productive resources.
We live below our human potential because we fail to use all the productive resources available to us and, as a result, over 200 million people are unemployed around the world. On the other hand, we live beyond our natural limits because we use more natural and finite resources than is sustainable.
Of course, taking advantage of this available additional economic potential requires the monetary financing of the additional production and demand. Given the huge sums currently provided by the central banks to the banking system, money as such is clearly not the impediment. So what could have been done — and can be done — differently? Tiny Iceland faced one of the most serious banking crises in 2008. It has overcome it by allowing failed banks to fail and focusing on providing a social safety net and re-building the real economy. Japan’s post-war economic miracle was supported by Central Bank lending guidance to the banking sector, ensuring that such lending financed productive investments. The quickest way to reduce funding through government borrowing is to restore the right of central banks to create new (debt and interest free) money to fund new production. As long as such new money is used to fund new wealth creation by the public and private sectors i.e. investments generating corresponding new products and services, it will not be inflationary. Newly created money would lead to new value being created rather than existing assets being bought and their prices driven up on a path to the next bubble.
Don’t expect huff-post to get anything near the “T”ruth.
I see the term, “Newly created money” and just about puke. These idiots think that money is something that is created.
Money, properly understood, is something you trade actual product or service for. You don’t produce, you DON’T HAVE MONEY.
A system that allows someone, anyone, to “create money” is a criminal enterprise. It’s just that simple. Divorcing money from the PRIOR production of value is simply a description of a counterfeiting operation. Just because central banks are legally allowed to do it doesn’t change one damn thing.
Welcome to the peoples republic of Kane , co IL
Home value 900K 2001. Sewer ,septic and private garbage. Taxes 16,000.
2014- Value 650K and falling. Nothing selling. Loads foreclosed , RE ,abandoned etc.Taxes 20,000.
Soccer Moms never met a tax increase they didn’t like you to pay for.
My mistake : Well , septic, priv garbage.8 k to replace well at 650 feet ,been there twice.
Interesting story Zelda (great game, btw)
After homeowners lose their homes to property taxes, and the tax base collapses, government will simply gift your house to union government drones (and government pensioners) in lieu of being unable to pay gold-plated pensions.
Every communist country throughout history has seized private property and redistributed it to party members and cronies. It will happen again unless something is done to get liberal progressive commies out of office.
KaD : appealing prop taxes. Been there done that , have the T- shirt and coffee mug.
Hired local expert attorney, cost 5k.
Result taxes inc only $ 100 last year. Score Co 1 , Tax slave 0
When I hear people talk about owning their home / property , I am torn between laughter and tears.
Allodial title – Not Bloody Lkely
So many of us from Illinois weighing in here. I’m not sure where the next “Detroit” will be… Illinois, and Chicago in particular, rank at the top of the “most bankrupt” lists, but then there’s all the Pennsylvania cities, most of California (remember Stockton?), Las Vegas, St. Louis… really, just about anywhere that union obligations outweigh reality.
I hope to “evacuate” Chicago before its crumbling facade results in skyrocketing taxes, mass exodus and chaos.
If CME group ever decamps Chicago for greener pastures it will be all she wrote , next stop Motown.
Goodbye gold coast , old town ,Streeterville, LP and the whole goddam North Shore. Imagine the whole population employed by Gubmint or University Health systems. Couldn’t happen to a better bunch of coolaid drinking Bolsheviks.
I read this and think, “thank God I live in a cheap part of IL and what I have sunk into my house is a minority of my ‘savings.'”
I also think I live in the crappiest state in the USSA and wonder how stupid I must be to remain here. Then I remember that my kids live and work here and no way am I moving away from them.
Grumble, grumble, grumble.
Property taxes as a means of raising revenue is a heinous crime. People hanging out too long in decaying areas will be punished for it, and lose everything if they are not careful – property taxes will skyrocket in a last ditch effort to support the drones – property prices will plummet, houses will become unsaleable due to the tax burden, and folks will lose their homes in droves. Unbelievable – those politicians should be flogged then shot.
But property taxes are not the worst taxes, in my opinion. Oh no, there is one type of tax even worse, even given how bad property tax is.
Payroll taxes are the worst. A tax on the act of employing people. Can there ever have been a worse tax? To tax a business not for its profits, but for the act of employing someone. The reason for the tax of course is that most businesses do not make a profit, so in their eternal chase of revenue they have found a way to collect even though the business has made no money.
Payroll taxes are the devil’s own work. Of course, my business pays property tax, too. So I know what I am talking about.
The governments have raked in well into the 9 figures in taxes directly from my business, not counting flow on. I have made a fraction of that. If you run a business, the government takes over ten times more than it leaves the owner of the business.
And despite this, there is a steady scream that business and their owners pay too little.
The fact is, the governments are killing the golden goose. It is on its last breath. Business should be free of tax, in my opinion. Tax income of individuals, tax consumption. But for fuck sake, let the wheels spin. If the tax on business was eliminated, you would see employment boom. But no, the belief is that business can adapt to any burden.
We are truly screwed.
I feel your pain Llpoh. Taxes are demoralizing, because they are a crime. They steal your money and they steal your will to live. People steal your money without your consent, and if you don’t pay, they throw you in jail. It’s no wonder 55,000 businesses have relocated to other countries. The government is cutting it’s own throat, and the throats of every person in this country.
Do you have to pay payroll taxes for robots?
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AWD – automation has killed a lot of manufacturing jobs.
Few people realize that the real killer has been the speed of info transfer that has dealt a death blow to manufacturing and many service jobs.
Manufacturing works just in time these days. Instant transfer of information has aided tremendously in the transfer of work overseas. In an instant, orders, build lusts, changes, design info can be transferred from anywhere in the US to a facility in China. Without that, there would not have been the transfer of jobs that has happened – the number would have been far less.
Manufacturing works just in time these days. Instant transfer of information has aided tremendously in the transfer of work overseas. In an instant, orders, build lusts, changes, design info can be transferred from anywhere in the US to a facility in China. Without that, there would not have been the transfer of jobs that has happened – the number would have been far less -llpoh
Interesting thing you bring up, my friend.
But also I remember what it is you produce.
We need more llpoh.
Does the common man drive the lust for job destruction and automation? No. Corporations do. Via the lust for profits and bigger bonuses to warped CEOs.
Take down the corporations and take down the lust for money. Return everything to local communities that care for one another.
Disband the stock market and stop making life a consistent chase for fiat dollars that they print out of thin air….
Chuck Marohn at strongtowns.org would argue that besides the generous salaries, governments at every level are going broke subsidizing suburbia. It simply costs too much to maintain the far flung infrastructure and there’s zero accounting for future maintenance. He’s dead one; listen to a few of the older podcasts to get the gist of the message.
No kidding about future maintenance. Short sightedness is the order of the day, in business and in government. It really is a failure of education, since willful ignorance is the only rational explanation.
And since education begins at home, we only have ourselves to blame. Which brings me to favorite topic, God’s Word. Since man is demonstrably unable to manage his own affairs, where do we turn? Thankfully there is an answer, and that is the rule book which God has given us,
“His divine power has granted to us all things that pertain to life and godliness” (2 Peter 1:3, ESV).
God didn’t leave anything out, but it is the simplicity of his calling which leaves most of us befuddled. That is our challenge, to break through the cloud of fear, uncertainty, and doubt, and look to a new heaven and a new earth, where pension plans are fully funded.
While it would be possible to tweak human forms of government to work for the betterment of all, the insidious nature of the enemy makes it all but certain that a few reap the reward of the many. Not so in God’s kingdom, but until that day comes, the freedom afforded the individual guaranteed by the CONUS is perhaps the best that we can hope to attain.
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