Chapter 9 Urged for Scranton, PA

As Scranton, Pa.’s City Council and Parking Authority squabble over a $1.4 million allocation the agency says it needs to avoid default, one accountant in the city says Scranton itself should seek bankruptcy protection. “The city should immediately explore a Chapter 9 bankruptcy filing or negotiate reductions in compensation to union employees,” said consultant Gary Lewis of Deloitte who lives in Scranton and is considering running for City Council next year. Lewis says the city’s structural deficit could reach almost $20 million this year, combining a roughly $10 million deficit in fiscal 2011 with an $8 million increase in departmental expenditures. “My whole point is that a Chapter 9 filing would allow the city to restructure its debts,” Lewis said in an interview. Messages were left with Mayor Chris Doherty seeking comment. Lewis said Doherty opposed bankruptcy because it would put an “indelible stain” on the city.

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