More payday drama in Scranton, Pennsylvania, as last-minute loan backs paychecks

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City workers in Scranton, Pa., who earlier this summer saw their salaries temporarily slashed to minimum wage, will be crossing their fingers on payday this week.

If an emergency loan to the city doesn't go through, neither will the workers' paychecks.

"We only know what the public knows, what's in the news," said a Department of Public Works employee who asked not to be named.

City officials, including Mayor Chris Doherty, insist that the city will meet payroll and all other city obligations now that New York-based Amalgamated Bank made the city a short-term tax anticipation loan of $6.25 million. But the city workforce already dealt with payday drama in July, when Doherty unilaterally cut everyone's salary -- including his own -- to the state minimum wage of $7.25 per hour.


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The loan is slated to close on Thursday and paychecks go out on Friday. Doherty said he expects payday to go smoothly.

"Everything seems to be on track," Doherty told local newspaper The Times-Tribune.

In addition to the regular bi-weekly payroll, the loan would allow the city to repay wages slashed from the July 6 pay period. A judge ruled that Doherty could not cut wages, but the checks had already gone out.

John Judge, president of Scranton’s firefighters union, told workers are grateful that Amalgamated seems to have come to the city's rescue.

“We found a bank that was willing to take a chance, Judge said. "The city needs this refinancing to plug the budget gaps.”

Even the emergency loan won't clear up the troubled finances of the Rust Belt town known as the "Electric City." The state has pledged an aid package of more than $2 million, but most of that sum will go to repay Amalgamated, which must be repaid in full by Dec. 15. Scranton also pledged 60 percent of city income taxes collected to Amalgamated until the debt is paid off.

Scranton has been beleaguered by the struggling regional and national economy and a decades-long exodus of jobs. Doherty said his minimum-wage gambit was driven by economics, but his critics say he was retaliating against the council for nixing his budget proposal.

The Associated Press contributed reporting to this story.