An open question to state lawmakers
Detroit's attempt at bankruptcy had an air of inevitability about it due to simple math compounded by demographics - its obligations are greater than its revenue and its tax base continues to dissolve into the surrounding suburbs and states.
If that sounds familiar it's because it's the same problem facing Scranton and other Pennsylvania cities, even if on a proportionally smaller scale.
Detroit is saddled with hundreds of millions of dollars in municipal employees' retirement costs that accumulated over decades - benefits that were politically beneficial to each city administration that agreed to them but which have proved financially deadly for succeeding generations who have to pay for them.
The downward spiral was entirely predictable and, in fact, economists have warned of it for decades.
That also is not unique to Detroit. In Scranton in 1987, a civic commission called Partnership '87 issued a report finding that the government's main obligation, in effect, had become paying unsustainable costs for its employees rather than providing public services. Mayoral candidate Thomas Gilhooley made the report his platform, but lost. No serious attempt at controlling the runaway costs occurred until Mayor Chris Doherty was elected and, in 2002, moved to establish a meaningful recovery plan under the state's distressed city law, this time with broad public support as demonstrated in a referendum.
Court ruling major setback
Ultimately, that attempt to reverse the city government's fortunes fell to a wrong-headed decision by a majority of the state Supreme Court, which defied the clear intent of the Legislature while basing its decision on a single word in Act 47.
Now, as state lawmakers tinker with revisions to Act 47 to correct the problem created by the Supreme Court and other flaws in the law, they should be guided by Detroit's experience and Scranton's. They also should look to a new study by the Pew Charitable Trusts of how states intervene in the governance of failing cities.
Pennsylvania is one of 19 states with laws that allow such intervention but, clearly, Act 47 is ineffective. Of 26 cities that have been declared distressed under the law, only six have recovered from that status.
The fundamental problem is that the state Legislature has maintained an archaic legal infrastructure for local government that maintains 2,500 cities, townships and boroughs and another 2,800 boards, authorities and commissions, without regard for changing economics and demographics.
At the same time, it has declined to actually help cities fund their recoveries, under the false premise that the economic problems are due solely to local governance issues.
That is particularly troubling in Scranton's case. The city's two-decade journey under Act 47 was, in effect, a test case of the law regarding municipal employee contracts. Under the Doherty administration, the city government did exactly what the state and its designated recovery coordinator, the Pennsylvania Economy League, wanted. But when the Supreme Court issued its bum decision, Scrantonians alone were left holding the bag.
State must step up
The state government must take a more active financial role in helping distressed cities. Then it should protect that investment by revising the archaic and obsolete local governance structure to provide incentives and mandates for local government consolidation, which has the potential to save billions of dollars for taxpayers.
There is no question that, like Detroit, several Pennsylvania cities face serious financial problems. Scranton alone faces an $18 million deficit next year, according to the most recent PEL forecast. The question of whether state lawmakers are equally serious about fixing those problems is very much an open one.