Can Power Be Restored in the Electric City? A Case Study of Scranton, Pennsylvania

Abstract

Once a robust producer of coal, iron, and steel, Scranton, Pennsylvania, is perilously close to financial insolvency. A 75-year population decline has eroded its tax base, and city officials have been unable to control costs — a combination that threatens to bankrupt the city. Scranton was classified as a distressed municipality under Pennsylvania Act 47 in 1992, yet nearly 25 years later its problems remain.

This situation stems from decades of increased government spending in the face of a declining population, a shrinking economy, and an eroding tax base. A new study for the Mercatus Center at George Mason University thoroughly reviews the relevant economic indicators and fiscal policies to show how the city fell so far. It analyzes the economic, fiscal, and political factors that contributed to Scranton’s decline and that have prevented it from recovering. It is a study in economic and fiscal forensics that provides lessons for other municipalities. We conclude by offering several recommendations to improve Scranton’s finances and economic outlook.

Keywords: Public Pensions, Regional Population, Municipality, Local Public Economy

JEL Classification: H75, R23, R51