At the end of business Friday the Scranton Parking Authority officially went into default on a nearly $1 million loan after city council refused to release the money to pay the bill, even though the city is legally obligated to do so.
Council's super majority feels the refusal to make that payment sends a strong signal that the city is serious about cleaning up its finances, but others worry about the long-term ramifications.
Scranton Mayor Chris Doherty fears allowing the parking authority to default on its loan will hurt the city's credit rating and make it harder for the city to get loans it needs.
Members of city council said they made their decision not to pay the parking authority's loan to send a message that the parking authority needs to be more self-sufficient.
City officials said the parking authority's financial situation won't affect the average person who parks in the city, but it could have dire consequences on city finances.
The parking authority turned to city council for the money to pay the loan, since it was included in the city's 2012 budget, but council refused, sending the parking authority in to default.
There is a catch.
Mayor Chris Doherty said the city was a co-signer for the parking authority loan, so the city will end up paying that $1 million anyway, and it could cause problems for the city's finances in the long run.
"This has an impact on the city's credit rating because the city guaranteed the loan, and down the line, you may see it when council's budget is unable to obtain the $16 million in borrowing," Doherty said.
The mayor said this may make it more difficult for the city to get a loan and make interest rates for those loans go up.
So why would city council allow the parking authority to default on its loan?
Council members said to send a message.
Councilman Jack Loscombe said the parking authority asked for money without a plan to increase its revenue in the future
"We can't keep coming and bailing them out. Ironically we found out this isn't the only payment. There's two more payments before the year is out. If they don't have the money now, they don't have the money for those two payments. Where are we going to get it? We have our city to consider," said Loscombe.
He added since the city's credit rating is already so low, he doesn't think the city will have trouble securing a $16 million loan needed to pay the rest of the year's bills.