A Lackawanna County, Pa., judge late Friday enjoined Scranton from paying its employees only the federal minimum wage, but the mayor of the cash-strapped city said there’s no money left with which to comply.

Judge Michael Barrasse of the Lackawanna County Court of Common Pleas issued a “preliminary permanent injunction” one day after Scranton, whose own officials say is down to its last $5,000, reduced all municipal workers’ pay to $7.25 per hour.

Calling Mayor Chris Doherty’s move “illegal and unlawful,” Barrasse said it violated collective bargaining agreements by reducing the wages.

“The actions have resulted in severe erosion in the faith of bargaining unit members in their collective bargaining representatives, continued instability in labor relations between plaintiffs and defendants, and serious harm visited upon employees as a result of the disruption of the status quo.”

Thomas Jennings of Philadelphia law firm Jennings Sigmond PC brought the action on behalf of municipal fire, police and machinist workers.

Doherty said the city is painted into a corner. “We can’t print money,” he told the Times-Tribune of Scranton. Messages seeking further comment were left with Doherty.

The city spends about $1 million in payroll every other week, according to local officials.

Doherty said the city needs a $16 million bridge loan — the amount of unfunded debt it has in its municipal budget — to meet payroll and cover past due bills. Blue Cross of Northeast Pennsylvania, which has a $2 million claim, has extended its deadline for payment to continue health care coverage to July 13.

Obtaining lender support has been difficult, given the 77,000-population city’s problems.

According to Doherty, M&T Bank backed off after the City Council withheld $1 million earmarked for the Scranton Parking Authority to make a bond payment due June 1. Though the council voted June 14 to release the funds, both the city and the authority were in default, as the city had guaranteed the bonds.

Scranton has been in the state-sponsored Act 47 workout program for distressed communities since 1992, but the lack of a revised recovery plan also has banks wary. The council, repeatedly at odds with Doherty, rejected the mayor’s most recent recovery plan proposal, which called for a 78% property tax increase over three years.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.