The economy continues to be challenging as city governments, households, and businesses have been dealing with interest rate volatility, rapidly rising housing costs, workforce shifts, climate change concerns, and global political unrest that have led to continued uncertainty and budgetary pressures. Household budgets are tight as wages are not keeping pace with inflation in many sectors.
The City of Scranton has navigated the challenges of the past few years well, managing budget surpluses in 2020, 2021, 2022, and 2023 and is tracking well, year to date against the 2024 Budget. We have managed expenditures and mitigated rising costs as best we can, including driving down healthcare costs while maintaining excellent employee health plans, and paring back budget line items to only fund what is necessary. We have incrementally increased pay rates for our more than 500 employees to attract and retain talent and continue to innovate around our services and programs.
There is still a significant gap in our salaries versus similar Pennsylvania cities, however, we have made progress and continue to seek competitive salaries for current and future staff. City employees need to pay their mortgages too. The City continues to monitor and manage its fiscal health recovery.
In 2024, the City refunded its outstanding General Obligation Notes, Series of 2016. Through this refunding the City realized a net debt service savings of $2,195,558. Also in 2024, the City created a Capital Reserve Fund to provide better accounting and transparency of City capital expenditures. One of our administration’s proudest moments occurred in March 2024 when the credit rating agency Standard & Poor’s (S&P) raised Scranton’s BBB- bond rating two notches to BBB+, with a positive outlook.
The upgrade to BBB+ reflects the City’s continued improvement in its liquidity position and balanced financial operations without reliance of federal stimulus. The positive outlook reflects the potential that S&P could raise the rating in the next two years if the City’s cash reserves and liquidity position continue to improve. While our cash position is stable, we have a long road ahead to true fiscal health given legacy obligations for pensions, healthcare, and other benefits.
We continue to fight an uphill battle against decreasing real estate assessments; until 2026 when the Lackawanna County Reassessment becomes a reality, we must continue to adjust for declines in the City’s real estate tax revenue stream. We continue to carefully manage our finances with constant acknowledgement that these are the hard-earned dollars of our residents and businesses, dollars meant to be spent on the safety, health, and well-being of our taxpayers and their families.
We believe that modest annual incremental tax increases to meet the costs of running our services is more manageable for our residents than, for example, hiking tax rates only when necessary, after years of keeping rates flat for political purposes.
Last modified: December 19, 2024
