Author Topic: Moody’s warns of bankruptcy in Scranton as city faces $20 million budget gap  (Read 413 times)

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Offline Cincinnatus

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Scranton hits the wall again.

Scranton could be headed towards another fiscal crisis like the one that resulted in city workers having their pay cut to minimum wage in 2012, according to a major credit ratings agency.

In a weekly publication, Moody’s warned investors that Scranton could be facing the threat of default or bankruptcy thanks to a $20 million budget gap for the fiscal year that begins Jan. 1. The city is supposed to approve a new budget by Nov. 15, which would have to close that deficit to balance the budget.

Without a balanced budget, the ratings agency warned that two financial institutions could withdraw from scheduled debt financing for the beleaguered northeastern Pennsylvania city.

“The resulting liquidity squeeze would leave the city with few options to meet its financial obligations, raising the threat of default or bankruptcy,” warned Moody’s analysts.

A similar crisis hit the city in July 2012, which lead to Mayor Chris Doherty cutting all city workers’ pay to minimum wage for several weeks, a move that made national headlines.

“A second liquidity crisis could have more severe effects, including additional defaults,” Moody’s warned...

Scranton has more than $195 million in outstanding debt, according to Moody’s.

We shall never be abandoned by Heaven while we act worthy of its aid ~~ Samuel Adams

Offline Oceander

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Here comes another chicken, home to roost.  One wonders how long before we get a cascade of cities filing for bankruptcy.

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