Municipal bankruptcy: The sadness of Scranton THEY have an old saying at the fire station on Mulberry Street, next door to Scranton's city hall: "I don't know who the new mayor is gonna be, but I hate him already." There has been little love lost between the firefighters and Chris Doherty, who was first elected mayor in 2001. Earlier this year Mr Doherty laid off several firemen and closed or partly shut some fire stations. The estrangement only grew when, earlier this month, the mayor slashed all municipal employees" salaries, including his own and that of the firemen, to the federal minimum wage. Scranton, in north-eastern Pennsylvania, has long been synonymous with industrial decline. A former big coal centre, it saw its main industries weaken or leave altogether over the past 50 years. Since the 1930s its population has fallen by almost half, to 76,000. Now it is also a byword for fiscal strife. Its pension funds are severely underfunded. Its budget deficit approaches $17m. Last month capital markets froze the city's borrowing after its parking authority was late with a city-guaranteed $1m bond payment. Nor were banks impressed that the city could not produce a financial plan. Mr Doherty's proposal included increasing property tax by 78% over three years, which the city council rejected. With no access to credit, the mayor says he did not have the cash to pay wages, which was why he cut salaries for the city's 400 civil servants. This caused turmoil for scores of Scranton households. Some firemen's salaries dropped from $24 an hour to $7.25. Burger-flippers often make more. A judge ruled that cutting salaries to the minimum wage is unlawful, but Mr Doherty said there was no money. At one point recently a mere $5,000 remained in the city's coffers. Then on July 18th, City Hall announced it could restore salaries - for now, at least. The city is no stranger to fiscal problems. In 1992 it entered Act 47, a state programme that provides assistance to financially distressed cities. Yet it seems to be in worse shape now. The state, which has limited power to intervene, has offered the city a zero-interest $2m loan as well as a $250,000 grant if the mayor and the city council can agree to new financial plan by August 1st. "I am afraid they are trying to buy a recovery plan," says John Judge, head of the firemen's union, who worries it is just a stopgap. Gary Lewis, a distressed-assets expert who runs a financial website called scrantonisbroke.blogspot.com, wants the city to consider filing for bankruptcy, which would allow it to restructure its crippling debt and change its expensive labour contracts. He points out that Scranton's deficit as a percentage of its budget is higher than San Bernardino's, which has just become the third Californian city in a month to file for Chapter 9, the municipal version of bankruptcy protection. Scranton - the birthplace of Joe Biden, the vice-president, and the setting for the American version of "The Office," a comedy programme - illustrates the growing financial pressure on local governments. In neighbouring New York state Stephanie Miner, the mayor of Syracuse, has warned that her city will go broke within two years unless its financial condition drastically improves. A recent report on the financial health of states and municipalities by Paul Volcker and Dick Ravitch forecasts a gloomy fiscal future, unless they stop "kicking the can down the road." Chris Hoene of the National League of Cities, agrees, but is not too apocalyptic. "We'll see more municipal bankruptcies, but in the tens, not in the hundreds," he says.