Scranton, Pa.’s City Council is willing to allocate $940,000 from a contingency fund to the Scranton Parking Authority to avoid the agency’s default, but wants its officials to answer questions at a public caucus Thursday night.
Failing that, some on the five-member council are prepared to allow the default of the city-backed bonds. A payment is due Friday.
On May 10, Mayor Peter Doherty requested emergency legislation from the council to provide $1.4 million to the authority. The council has balked, saying the SPA has provided sketchy budget information and has withheld such details as debt outstanding, bond counsel and governing trust agreements.
The council asked Doherty, SPA executive director Robert Scopelliti and city business administrator Ryan McGowan to appear. Messages seeking comment were left with the three officials.
Council member Robert McGoff warned about the stigma of a default, even if the city is merely a guarantor.
“The minute they go to court there is not one bank that will do any business with the city and that jeopardizes everything that’s in the budget that relies upon the banking community,” he said.
According to the SPA’s operating budget for the year ending Dec. 31, 2011, debt service is at $3.4 million — $2 million for Series 2007 bonds and $1.2 million for Series 2004 and 2006 bonds.
Scranton, a 76,000-population city, the seat of Lackawanna County and one of 27 distressed communities under Pennsylvania’s Act 47 program, revised its recovery plan last week.
It proposes a 78% tax increase over three years, not including tax hikes seen as necessary to cover costs related to a state Supreme Court ruling last year that said firefighter arbitration awards took precedence over Act 47-related restraints.
According to recovery plan documents, estimated debt service from the ruling could range from $14.5 million to $30 million, depending upon the results of settlement negotiations.