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Scranton pays up owed income plus interest to city employees

City employees in Scranton who earlier this month saw their pay slashed to paid minimum wage over a dispute between city leaders will soon get the money owed them, plus interest.

With the pay reinstated, John Judge, president of the local firefighters union, said he was “cautiously optimistic” the city’s latest financial crisis is over.

Earlier this month Scranton attracted international attention when Mayor Chris Doherty, a Democrat, said the city was unable to meet its million-dollar payroll, and he ordered all 400 city workers to be paid the federal minimum wage of $7.25 an hour. Doherty, whose salary is $50,000 a year, slashed his own pay along with police, firefighters and public works employees.

Unions representing city workers went to court and won an injunction preventing Doherty from violating collective bargaining agreements. The mayor ignored the court order, explaining the city did not have money to pay workers their full salaries.

Firefighters like Judge called the mayor’s decision “insulting.”

“These guys are trained professionals. These guys train every day," he said. "They put their lives on the line.”

Two weeks ago, citing improved tax flow, the mayor restored full pay but still faced a contempt hearing for ignoring a judge’s order. The city, meanwhile, owed workers about $700,000 in back wages.

Last Friday, the mayor and city council, all of whom are Democrats, reached agreement on a financial recovery plan that among other things calls for a minimum 33 percent increase in real estate taxes. Pending state approval, the plan paves the way for Scranton to almost immediately receive more than $2 million through in a state loan and a grant.

The mayor then struck a deal with the unions to pay the back wages and 6 percent interest. In exchange, the unions dropped their contempt petition against the mayor.

Doherty described the last month as a “tough situation.” “Employees deserve to be paid," he said. "They have done a good job for the city, that is never a question, and we have an obligation to pay them.”

But Scranton’s financial problems are not over. Long-term debt is over $250 million, including $15 million owed to police and firefighters resulting from wage hikes that were not honored.

Teri Ooms of the Pennsylvania-based Institute for Public Policy and Economic Development said Scranton faces “several more years of crisis mode and then several years of rebuilding mode before we can say we have weathered the storm.”

David Lee Miller currently serves as a New York-based correspondent for FOX News Channel (FNC). He joined FNC in 1996 as a London-based correspondent.