Proposed Luzerne County 8 percent tax hike may be off the table

By Jennifer Learn-Andes - | December 8th, 2015 10:56 pm

Luzerne County Council members now have around $9.6 million in potential budget cuts — more than the $8.4 million needed to avoid an 8 percent tax hike next year.

The main trade-off: two big-ticket solutions would slow the county’s efforts to climb out of a fiscal hole.

The council had reduced the deficit to $13.1 million in October using $3.8 million in savings from this year’s debt restructuring.

If the amendments discussed Tuesday pass next week, the deficit would grow to $15.1 million because the council will take back $2 million of this debt restructuring savings for next year’s operating expenses and halt plans to pay down another $5.7 million of the deficit in 2016.

The council members did not vote on the options because Tuesday’s meeting was a budget work session, but several expressed support for both.

“It seems like a prudent decision,” said Councilman Harry Haas.

Council Chairwoman Linda McClosky Houck said she still supports the goal to get out of the red and build a reserve for financial stability, but she does not believe taxes should be raised to create a savings account.

Councilman Rick Morelli summed up his support for the plan this way: “Would you rather have a reserve or go back to taxpayers for more money?”

But Councilman Tim McGinley cautioned the approach is only a temporary fix because it relies on some sizable one-time revenue sources that won’t be available for 2017.

An 8 percent hike, the maximum allowed annually under the home rule charter, would require the owner of a $100,000 property to pay $46 more, for a new total bill of $620.52. Three citizens spoke during a budget hearing preceding the work session, and two called for no tax hike to help overburdened property owners.

The council must adopt a budget on Dec. 15 to comply with the home rule charter deadline.

Councilman Stephen J. Urban urged his colleagues to support his proposal to cut the budget for court branches by $1.148 million on top of $405,000 in previously approved reductions. Court officials said the additional cuts would “cripple” their operations.

“I think they can survive on that,” Urban said of his suggested downsizing, alleging court officials are secretive about their finances and have more staff and higher compensation than counterparts in similarly-sized counties. “This basically puts a short leash on them, and they need it.”

Despite Urban’s objections, several council members asked for a response from county Court Administrator Michael Shucosky, who was in the audience.

Shucosky said he’d “love” to see the staffing comparisons Urban is using as a basis for his claims. He said there is no court “slush fund” and said every court bank account is “an open book” in the county’s computerized financial records and treasurer’s office reports.

Urban said he obtained salary information from other counties through public information requests. Several council members said he should share it with them if he wants them to consider his proposal.

A proposed budget amendment to increase next year’s debt repayment expenses by $415,000 sparked an exchange.

The proposal stems from projections the county will pay higher interest — an estimated 3.5 percent — on both the tax anticipation loan and a $20 million loan needed to compensate for state budget impasse funding delays because of a recent county credit rating downgrade.

Standard & Poor’s cited its “worsening view” of county management and the county’s “political gridlock” as reasons for the downgrade and pointed to a council majority’s initial rejection of the $20 million loan to ensure the county meets a debt repayment due Dec. 15.

Councilman Rick Williams, who had supported both the initial and approved borrowings, said Tuesday the downgrade shows “consequences occur” when council members vote to send a message or point blame instead of deciding what’s in the “best interest of citizens.”

Williams said it’s “sad” the county will be penalized for years with a downgraded rating because of a “vote made by six.”

Councilman Edward Brominski, who did not support the borrowing, said he “resents” Williams’ comments because he always votes in the best interest of citizens. Brominski rattled off his votes against tax hikes, elimination of the homestead tax hike and the transfer of county-owned parks to the state as evidence.

“How dare you say that?” Brominski asked Williams. “You should be ashamed of yourself.”

Morelli backed up Williams, saying rejecting a loan needed to avoid defaulting on a debt repayment is the “worst thing you can do.”

Council mulls increasing debt

By Jennifer Learn-Andes

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.