City of Scranton loses landmark case regarding unlawful taxation

City of Scranton loses landmark case regarding unlawful taxation
tpsdave / Pixabay

On Wednesday, Oct 18, 2017, Judge Gibbons ruled against the city of Scranton,PA establishing a potential precedent for the entire state of Pennsylvania. The lawsuit in regard to whether or not Scranton is subject to the Act 511 cap that imposes a limit on how much taxes the city of Scranton can collect on the local level. The plaintiffs, a group of citizens including Mayoral candidate Gary St. Fleur, alleged that the city of Scranton has been over taxing the people of Scranton for the past 10 years. The current year has an overage of $10 million dollars. Judge Gibbons has stated that:

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"Whether it does is immaterial because Act 511 clearly and indisputably applies to the City of Scranton…Act 511 denies Scranton the right to repeatedly levy and collect taxes in excess of its prescribed cap without taking further steps”

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“As such, we will not change our conclusion that the Home Rule Charter Law is subservient to Act 511”

In other words, the city of Scranton is unquestionable subject to Act 511. This means that the recovery plan is a farce and bankruptcy is an inevitably. Furthermore, tax payers will be liable for refunds for any taxes paid in excess of the cap for the past three years. The potential cost to the city will be upwards of $50 million dollars.



The City of Scranton is currently over the cap and is expected to exceed the cap by $10 million according to its current budget. Mr. St. Fleur wants the courts to put a stop to this immediately.

On August 4th, Judge Gibbons ruled against the city in early preliminary hearings, throwing all the city’s objections regarding the Act 511 lawsuit (here).  The suit contends that the City of Scranton has been illegally taxing the people of Scranton by increasing local taxes pass the state limit.

The state limit is imposed by an ordinance entitled Act 511 that places a cap on the amount of taxes that can be raised on the local level. The cap is determined by taking the value of the properties within the municipality and multiplying them by 1.2 percent.  The suit was filed against the city of Scranton in March 1st through a mandamus action which sought to force the government of Scranton to observe the cap and reduce tax accordingly. The city of Scranton has argued that since it is a home-rule charter it does not have to obey the Act 511 State law. Judge Gibbons, who oversaw the hearing, disagrees.  In his eight-page ruling, he explains that the home rule charter of Scranton is subservient to state law and thus the cap on Act 511 taxes “cannot be superseded by the home rule charter law.”

The city of Scranton had twenty days to respond to the defeat and did so on August 22nd. In their response, they alleged that the city of Scranton does not have to observe Act 511 because of its home rule charter and can thus raise taxes as high as possible. The city requested the judge reconsider his earlier ruling. They also requested that the case be thrown out because it is causing distress to a cash strapped city.

“I agree that the case should be dealt with immediately since it has been proven that the city has been stealing tax money from the good people of Scranton”, Says Gary St. Fleur. “Wasting tax payer’s money in order to continue to illegally collect taxes is heinous and offensive!!”

Mr. St. Fleur, who is also running for Mayor of Scranton, has been adamant that City of Scranton taxes are far too high and that the city needs to file bankruptcy. “This victory demonstrates that Scranton financials are so dire that they must illegally tax to make due.  This case forces the city to confront the reality that they have run out of time and that the Scranton tax payer cannot bail out the city of Scranton.”

The statutory law in question specifically states:

“The aggregate amount of all taxes imposed by any political subdivision under this section and in effect during any fiscal year shall not exceed an amount equal to the product obtained by multiplying the latest total market valuation of real estate in such political subdivision, as determined by the board for the assessment and revision of taxes or any similar board established by the assessment laws which determines market values of real estate within the political subdivision, by twelve mills.”(Act 511)

The lawsuit, or mandamus action, would force the Mayor of the City to obey the law which under Act 511 reads:

Any one of more persons liable for the payment of taxes levied and collected under the authority of this chapter shall have the right to complain to the court of common pleas of the county in an action mandamus to compel compliance with the preceding provision of this subsection. Tax moneys levied and collected in any fiscal year in excess of the limitations imposed by this chapter shall not be expended during such a year, but shall be deposited in a separate account in the treasury of the political subdivision for expenditure in the following fiscal year.

Act 511 bases the cap on a formula that includes the value of the properties in the municipality multiplied by 12 mills- a mill being one of one thousand. Scranton Mayoral Candidate Gary St. Fleur explains, “The legislation is written to protect citizens form excessive taxation. If home values are plummeting then that is a sure indication that the people are becoming poorer. It would be unconscionable to continue increasing the levying of taxes on an already impoverished people.”

St. Fleur contends that the City of Scranton is in severe financial distress and there is practically no recourse left except for the government to file for Chapter 9 Bankruptcy. He has also initiated a ballot measure to force the City into Bankruptcy. A Wells Fargo report from October 2016 explains that a 2014 audit of Scranton revealed $375 million in liabilities and $184 million in unfunded non-pension post-retirement benefits to government employees. The City has had to sell various public assets, such as the sewer authority ($195 million), and issue bonds (that are rated as ‘junk’ status by rating agencies) in order to sustain adequate revenue stream. Mr. St Fleur is adamant that lowering taxes across the board is the only way to Save Scranton from its economic depression. Bankruptcy would lessen the cities financial burdens, making lessening taxes possible.

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