CBS EVENING NEWS for July 10, 2012, CBS.(Broadcast transcript)

(From CBS News Channel)

SCOTT PELLEY, CBS NEWS ANCHOR: Tonight, going broke. A city near bankruptcy cuts the pay of firemen and cops to minimum wage. Another city`s cuts have students jammed into classrooms. Elaine Quijano and Ben Tracy on cities in crisis.

The Supreme Court upheld the president`s health care law. But now several states are opting out. Anna Werner reports.

What`s behind this extreme weather? Wyatt Andrews says a government study out today names the culprit.

And David Martin on the unbelievable mountains of paper that stand between wounded veterans and their benefits.

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DAVID MARTIN, CBS CORRESPONDENT: You`re surrounded by paper.

UNIDENTIFIED FEMALE: I am. I am. This is my daily life.

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ANNOUNCER: This is the CBS EVENING NEWS with Scott Pelley.

PELLEY: Good evening. If you go to the official website for the city of Scranton, Pennsylvania, you will find this boast -- the future is here. Well, city workers hope not, because their pay has just been slashed to minimum wage. Scranton is just one of many cities struggling to recover from the great recession. American cities have seen their revenues decline for five straight years. 72 percent of them are making personnel cuts. It`s a problem most everywhere, so we have reports from East Coast to West. First, Elaine Quijano in Scranton. Elaine?

ELAINE QUIJANO, CBS CORRESPONDENT: Well, Scott, when public union workers opened their paychecks here last Friday, they were shocked to see just how small those checks were. Now they`re wondering what`s next for them and their city.

And Scott, it has been a fight here, certainly a difficult time for the city of Scranton. The unions, in fact, are suing the mayor here, Chris Doherty and the city in order to stop the pay cuts. As you`ve said, they are now getting minimum wage, some 400 public union workers. That is $7.25 an hour. We talked to one worker here today who has been with the Department of Public Works for some 26 years, and here now is his story.

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QUIJANO: Robert Paglisi (ph) has worked for Scranton`s Department of Public Works for 26 years. He made $19 an hour. But last week, his salary, along with nearly 400 other public workers, was cut to minimum wage -- $7.25 an hour.

UNIDENTIFIED MALE: I own a house in the city. Two children. A wife. We have car payments. We have house payments. We have utility bills. We have to pay them all. And it`s not going to be easy to do on this kind of money.

QUIJANO: Scranton faces a $16 million budget gap. Mayor Chris Doherty proposed either a 29 percent tax hike or drastic cuts.

Wage cuts are one thing.

UNIDENTIFIED MALE: Right.

QUIJANO: Minimum wage is another.

UNIDENTIFIED MALE: We don`t have enough money. That`s what it comes down to. We`re trying to balance how do we get through this.

QUIJANO: Doherty says after paying the workers minimum wage, the city had just $5,000 left.

UNIDENTIFIED MALE: We probably would have lost the gas and the …