Scranton, Pennsylvania blasted into the national consciousness last summer when its mayor, facing a cash shortage, slashed city worker wages to minimum wage.
In August the city was saved from immediate ruin by the union-owned Amalgamated Bank:
Amalgamated Bank recently provided $6.25 million of short-term financing to the City of Scranton, Pennsylvania. Nearly two months ago, the salaries of 400 municipal employees were reduced to the minimum wage level. Now with Amalgamated’s loan, the City can make its full weekly payrolls and pay its vendors while completing and putting in place a three-year fiscal recovery plan.
After Amalgamated was repaid, it gave Scranton a larger loan with longer terms:
Scranton was then able to subsequently line up long-term financing through a ten-year private placement, and the City is now continuing to implement its multi-year Recovery Plan. Scranton fully repaid our first TAN loan in December 2012; Amalgamated subsequently stepped-up our commitment to Scranton in January 2013 with a larger and longer second TAN loan.
Scranton then entered the bond market to do a private placement of $14 million of bonds due in 2023 with 7.50 percent interest. These are general obligation bonds backed by the full faith and credit of the city. The city needed to borrow more in large part due to a court decision that required it to pay city unions a $17 million settlement. That required additional debt around $25 million (page 7):