Luzerne County maintains credit rating

Credit rating agency Standard and Poor’s is keeping Luzerne County government at an A rating with a stable outlook, county Manager Romilda Crocamo informed county council Monday.

The explanation provided by S&P indicates a county real estate tax increase is anticipated for 2026 for the county budget “to remain structurally balanced.”

S&P had elevated the county’s rating from A- to an A rating in February 2023.

The county recently had a rating call with S&P as part of a debt restructuring county council approved last month, county Budget/Finance Division Head Mary Roselle told council last week.

The restructuring was estimated to save $3.47 million after fees and won’t extend the 2030 date for the county to be out of debt, according to FSL Public Finance, the county’s outside financial advisor. FSL plans to close on the transaction in October.

Crocamo said the administration is proud to announce maintenance of the A stable S&P rating, describing it as “a testament to our commitment to fiscal responsibility and economic stability” and “a clear indication that Luzerne County is indeed on the right track.”

“This achievement underscores our dedication to ensuring that our county remains on a solid financial footing,” Crocamo said. “The affirmation of this rating not only reflects our prudent management of resources but also highlights the resilience and potential of our community.”

According to S&P’s research update accompanying the decision:

The A long-term rating has been assigned to both the $57.98 million debt restructuring package and the county’s existing debt.

The rating reflects the county’s “positive financial performance in recent years following years of imbalanced operations and low debt burden,” it said.

“These credit strengths are offset by the county’s limited economy and lack of long-term planning and policies, though the new management team aims to implement more formal policies/procedures,” it said.

After six consecutive operating surpluses, the county ended 2024 with a $1.7 million, or a 1.2%, deficit, attributed to increases in judicial and correctional costs, it said.

As previously reported, because general fund expenses exceeded revenues and other financing by $1.79 million in 2024, the year-end surplus balance carried on the county’s financial books decreased from $28.8 million on Dec. 31, 2023, to $27 million on Dec. 31, 2024.

“Management notes the county faces several ongoing lawsuits from inmates, but is working with insurance to reduce the risk and cost to Luzerne County,” S&P said. “Management projects ending fiscal 2025 with a general fund surplus, but currently does not have estimates.”

As federal American Rescue Plan Act funds are fully expended, county management “aims to increase its property tax millage” for 2026, it said.

Council must approve the budget.

“Given the county’s efforts to make the necessary budgetary adjustments in the long term to remain structurally balanced, along with the savings incurred from the refunding, we expect Luzerne County’s financial profile will remain stable,” S&P said.

Council did not increase real estate taxes for 2024 or 2025.

County taxes are currently 6.3541 mills. A mill is $1 tax on every $1,000 in assessed value of real estate. For example, the county tax bill is $635.41 on a property assessed at $100,000.

S&P’s stable outlook is based on its “expectation that Luzerne County will continue to make the necessary budgetary adjustments to remain at least structurally balanced and maintain its reserves, barring aid of one-time revenues,” it said.

In a downside scenario, it could lower the rating if the county experiences “any budgetary pressures” or incurs “significant capital needs that would create inflexible operations or a weakened financial profile.”

The upside scenario could raise the rating if the county’s “economic metrics improve while it grows and maintains reserves at levels commensurate with those of higher-rated peers.”

S&P said the rating also reflects the following five factors, reported verbatim:

• Luzerne County is located within the Scranton-Wilkes-Barre-Hazleton metropolitan statistical area, a regional center with jobs in government, health care, and manufacturing/distribution.

In our view, the county’s local economy is somewhat limited and stagnant. However, county officials report an Amazon data center in the early stages of development; the $20 billion project is expected to create more than 1,000 new jobs over the next five years, which is favorable to residents given the county’s historically high unemployment rate compared with that of the nation.

• Given historical financial pressures and timing of receipt of property tax revenues, the county has issued tax anticipation notes annually; in fiscal 2024, it issued $11.5 million in short-term notes in advance of property tax collections to cover general fund expenditures. Notably, management indicates the county did not need to short-term borrow in fiscal 2025 given strong interest revenues; however, it might do so in fiscal 2026.

• A management team that aims to sustain fiscal stability over the long term, but lacks comprehensive long-term financial and capital planning. County officials use five years of historical data when constructing the budget and provide monthly budget-to-actual reports to council. The county maintains a basic three-year capital plan outlining its upcoming projects; the plan is updated annually. While the county does not currently have a long term financial plan, it is in the process of completing a comprehensive 5 year plan. Luzerne County follows state guidelines for its investment and debt management. It is in the process of implementing a formal reserve policy, aiming to maintain 25% in general fund reserves.

• The county’s limited debt profile and low carrying charges are a credit strength, in our view. Luzerne County terminated its last two outstanding swaps on Aug. 28, 2025, and received a total payment of $33,450. The county has no additional debt plans in the near term; however, management plans to issue debt within five years to enhance and expand its prison.

Although total estimated costs of the project are currently preliminary, we note all of the county’s existing debt matures by 2030; therefore, we do not expect the upcoming debt to materially weaken the county’s long-term liabilities profile.

• Following a history of delaying part of its required pension fund payment until property taxes were received, in 2017, Luzerne County realigned its process so that all pension payments are made on time, which it has done for the past five years and plans to continue. In addition, in 2022, it incorporated updated assumptions, including a decrease in the discount rate to 6.75% from 7.00%, to reduce market volatility risk in future years. Given the county’s improved financial position and positive operating performance, we expect it will be able to manage the increased obligation and pension payments. In fiscal 2024, its pension plan was 72% funded. The county also administers an other post-employment benefit plan for eligible retirees, which is funded on a pay-as-you-go basis with no pre-funding of its $11 million liability. In 2024, Luzerne County made a $767,304 payment.