A Lackawanna County, Pa., court was scheduled Monday to hear a petition by a Scranton taxpayer group that alleges the distressed city's tripling of its local services tax is illegal.
Scranton, the 76,000-population county seat in northeast Pennsylvania, is seeking approval from the Lackawanna Court of Common Pleas to increase the tax levied on the 32,000 people with jobs inside the city limits to $156 per year, in line with a recovery plan crafted by workout advisor Henry Amoroso – whom the Scranton Chamber of Commerce hired.
Mayor Bill Courtright and the City Council approved the plan.
In a response to the city's Dec. 27 petition, local attorney John McGovern said in a court filing that the amount is triple the statutorily permitted amount and that Scranton can only collect $27.8 million from local taxes annually.
McGovern is representing the so-called Group of Eight, led by Gary St. Fleur, the founder of the Save Scranton political activist organization. St. Fleur, who led a local business boycott against the mercantile tax last year, accused city officials of exceeding the legal limit the last five years with a recent budget showing a $10 million overage.
Other members of the Group of Eight are Nicholas Gettel, Casey Durkin, Damian Biancerelli, Rich Johnson, Ethan Green, Angela Gilgallon and Michele McGovern.
McGovern has subpoenaed Courtright, council members, city Business Administrator David Bulzoni and the Pennsylvania Economy League, the city's advisor under Pennsylvania's Act 47 workout program for distressed communities.
According to St. Fleur, Pennsylvania's Act 511, which governs local taxes, caps collections through local taxes, which is determined by the value of all city property multiplied by 12 mills.
"How could the mayor or City Council approve of an illegal plan?," said St. Fleur. "Did Henry Amoroso or the mayor, City Council or PEL know about the legal limit on Act 511 taxes? Are they incompetent, or did they intentionally violate the law?"
A message seeking comment was left with city Solicitor Jessica Boyles.
In a Friday motion by Boyles looking to squash the subpoena of Courtright, the city said the taxpayer group is attempting "to harass, unreasonably annoy and/or embarrass the mayor." She said in her filing that Bulzoni and PEL executive director Gerald Cross are scheduled to testify.
Scranton in September closed a $32 million parking system transaction with a National Development Council public-private partnership affiliate. It marked the latest step by the city to regain capital-markets access, which it lost when the City Council in 2012 defaulted on a parking authority bond payment.
The city has since paid that debt.
Last June, shortly after S&P Global Ratings assigned Scranton its first rating in five years – junk-level BB with a stable outlook -- the city issued $40 million of redevelopment authority lease revenue bonds to fund a back-pay settlement with police and fire unions.