Map of downtown Detroit with I-375 and BS-375 highlighted (Photo credit: Wikipedia)
DETROIT — Detroit on Thursday became the largest city in U.S. history to file for bankruptcy, as the state-appointed emergency manager filed for Chapter 9 protection.
Kevyn Orr, a bankruptcy expert, was hired by the state in March to lead Detroit out of a fiscal free-fall and made the filing Thursday in federal bankruptcy court.
A number of factors — most notably steep population and tax base falls — have been blamed on Detroit’s tumble toward insolvency. Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million is struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them.
In recent months, the city has relied on state-backed bond money to meet payroll for its approximately 10,000 employees.
Map of Pennsylvania highlighting Luzerne County (Photo credit: Wikipedia)
Federal investigators are looking into whether a McDonald’s franchise in Luzerne County is breaking any laws by forcing employees to accept paychecks in the form of fee-carrying debit cards.
Meanwhile, lawyers for the franchise owners say the lawsuit’s contention that employees incur fees on all transactions is wrong and there are several ways workers could access their money for free.
Attorney Michael Cefalo of West Pittson recently filed the class action lawsuit in Luzerne County Court on behalf of Natalie Gunshannon, a Dallas Township woman who quit her job at the McDonald’s in Shavertown after the company issued her a debit card as pay and refused to pay her by check or direct deposit.
Days after the suit was filed and appeared nationally in the media, Cefalo said an investigator with the U.S. Department of Labor contacted his law office.
Map of Pennsylvania highlighting Luzerne County (Photo credit: Wikipedia)
She spent her days serving up Happy Meals, but when it came time to get paid, Natalie Gunshannon says a local McDonald’s franchisee gave her an unhappy deal.
The Shavertown McDonald’s forces workers to be paid only one way: with a payroll debit card that burdens workers with hefty fees to obtain their hard-earned cash, according to a lawsuit filed Thursday on behalf of Gunshannon and other McDonald’s workers.
Gunshannon and an untold number of current and former employees had no option to receive a traditional paycheck or get paid by direct deposit, she and her attorneys said in the class-action against franchise owners Albert and Carol Mueller of Clarks Summit.
“I’m looking for the pay I am owed and for them to understand there has to be an option,” Gunshannon, 27, said Thursday outside her Dallas Township residence.
Seal of the United States Internal Revenue Service. The design is the same as the Treasury seal with an IRS inscription. (Photo credit: Wikipedia)
WASHINGTON(AP) — Workers probably won’t feel the full brunt of next year’s tax increases in their January paychecks, but don’t be fooled by the temporary reprieve.
No matter what Congress does to address the year-end fiscal cliff, it’s already too late for employers to accurately withhold income taxes from January paychecks, unless all the current tax rates remain unchanged, which is an unlikely scenario.
Social Security payroll taxes are set to increase on Jan. 1, so workers should immediately feel the squeeze of a 2 percent cut in their take-home pay. But as talks drag on over how to address other year-end tax increases, the Internal Revenue Service has delayed releasing income tax withholding tables for 2013.
As a result, employers are planning to withhold income taxes at the 2012 rates, at least for the first one or two paychecks of the year, said Michael O’Toole of the American Payroll Association.
Scranton‘s next employee payday on Friday hinges on a loan closing on Thursday, city officials said.
Mayor Chris Doherty expressed confidence that the closing between the city and Amalgamated Bank of New York and Washington, D.C., would occur as scheduled Thursday and payroll would be made Friday.
“Everything seems to be on track” with the loan and payroll, Mr. Doherty said.
On Aug. 23, the mayor and council President Janet Evans announced the city had secured a $6.25 million tax-anticipation note loan from Amalgamated Bank, which bills itself as the largest union-owned bank in the country.
At Mayor Vaughn D. Spencer’s request, City Council on Monday awarded data processing giant ADP a $214,100 contract to take over the city’s payroll operations.
The move will get rid of an error-prone, in-house system for which the IRS has fined the city more than $100,000.
“We’re not payroll experts; we’re getting out of the business,” said Christopher Zale, acting director of administrative services.
The IRS fines - $50,400 each for tax years 2007 and 2008 because the city’s W-2 forms weren’t compatible with IRS computers, and weren’t re-filed properly until months after the deadline – were levied in 2010.
Facing yet another cash-flow crisis, Scranton is trying to borrow a $2.75 million tax-anticipation note to pay routine daily bills and payroll.
The city administration has been negotiating with Landmark Community Bank for the TAN, but city council has balked at the bank’s demand that, in exchange for a TAN, the city must back an unsecured $2.95 million loan that the bank gave to the Scranton Parking Authority last year, council members said at Thursday’s meeting.
TANs are fairly routine, short-term loans that municipalities borrow to cover cash-flow gaps until tax revenues come in. However, the TAN dust-up is another example of how little is routine when it comes to the city’s long-standing fiscal challenges and divisions between the administration and council.
CHESTER, Pa. (AP) — Nearly two decades after being declared financially distressed, the school system in this struggling Philadelphia suburb faces a new and even more daunting crisis: It may run out of cash.
Administrators in the Chester Upland School District, one of Pennsylvania’s poorest systems and once the center of a failed experiment in school privatization, say they won’t be able to make payroll Wednesday unless the state advances the district $18.7 million in expected funding. While teachers and staff have vowed to continue working, the situation has thrown the system into new turmoil and has parents scrambling for other options.
Hoping to avoid a shutdown, the school filed a lawsuit Thursday, declaring a “cash-flow crisis” and asking a judge to tell state Education Secretary Ronald Tomalis that he must act to provide students in the district with a “thorough and efficient educational system.” Meanwhile, anxious parents are looking at other options for their children, such as sending them to private schools or having them live with relatives and go to other public schools.
A bad situation is getting worse by the minute. Harrisburg has 557 employees and the payroll is $1.2 million. Payroll is due next week and the city has $492,000.00 in the bank.
Fast Eddie and Linda Thompson are scrambling to find lenders to cover the payroll gap but lenders are skittish about investing in Harrisburg. Not just because of the incinerator debt but also because of the fighting between the mayor and council. There is no clear plan in place to get Harrisburg out of the mess they find themselves in. There is a lot of rhetoric and finger-pointing but no good solutions seem to be forthcoming.
Somebody needs to take control of this rapidly deteriorating situation!