In a “Saturday Night Live” skit four years ago, cast member Jason Sudeikis, playing Joe Biden, comically described Scranton, Pa. — the then-vice presidential candidate’s hometown — as “the absolute worst place on Earth.” Scranton has indeed suffered through hard times: The city’s poverty rate today is several percentage points above the national average, and its median household income is just two-thirds the national average. Yet Scranton managed to avoid insolvency until recently, when an arbitrator ruled that it owed fire and police personnel $30 million in raises and backpay. In June, with only $5,000 in the bank, Scranton defaulted on some of its debt. It’s currently trying to stave off bankruptcy.

Scranton has become the latest victim of Pennsylvania’s one-sided binding-arbitration law, which allows unelected mediators to burden cities with large compensation awards that ignore fiscal reality. Pennsylvania isn’t alone: About 20 states foist some form of binding arbitration on their local governments, despite studies showing that the system is often biased against taxpayers and frequently results in much bigger pay awards than government workers earn in places without arbitration. Even as reformers seek ways to cut local-government costs during the ongoing fiscal crisis, binding arbitration has largely escaped unchanged.