A deficit that has plagued Luzerne County officials for several years is now cleared, county Manager C. David Pedri announced Friday.
The county ended 2017 with a nearly $700,000 fund balance — $694,679 to be exact — according to the newly released audit.
That means the county has paid off the $8 million shortfall on the books at the end of 2016 and now has a reserve that will carry over from year to year. When a deficit exists, any surplus left at the end of the year is swept away for deficit reduction.
“2017 may go down as one of the best financial years in Luzerne County history,” Pedri said. “We got our financial house in order, and the only question is, ‘What’s next?’”
Prior county manager Robert Lawton had been criticized for allowing the deficit to balloon to $16.9 million after his hiring in February 2012, but he had started making strides toward getting the county out of the red in 2015 before leaving at the end of that year.
A myriad of causes was cited for the prior deficit in addition to overspending. For example, Lawton decided to halt a budgeted $4.3 million cash advance on back taxes because he viewed it as a one-time fix that diminished future receipts.
The deficit was down to $9.4 million by the end of 2015, and a $1.4 million surplus under Pedri’s watch further reduced the shortfall to $8 million at the end of 2016.
How did the county wipe out such a massive deficit and put money in the bank in 2017?
The audit largely credits one-time revenue windfalls — a $4 million windfall settling baseball franchise litigation with Lackawanna County and $2 million in debt refinancing savings, according to Pedri and other county officials.
Pedri also said the audit showed the general fund operating budget under his management came in $632,000 under budget due to monitoring and stringent controls.
Completed by CliftonLarsonAllen, the audit is posted under the budget/finance section at www.luzernecounty.org.
‘Excellent budgeting’
On top of erasing the deficit, county officials also came up with an additional $9 million in 2017 to correct an inherited problem of late employee pension fund subsidy payments, Pedri noted in a release.
The audit says the county should strive for a fund balance reserve of approximately $6.7 million based on the size of its budget.
In an email forwarding the audit to council members, Pedri thanked them for their “support, tough decisions and excellent budgeting.” All audit recommendations will be “complied with and followed,” he wrote.
A council majority had opted to direct one-time windfalls toward deficit reduction at the end of 2017, concluding that was more pressing than beefing up the dwindling capital projects fund.
Pedri had informed council in May the audit would not be completed by the home rule government’s June 30 deadline due to Children and Youth financial-record issues.
The audit released Friday cites a lack of supporting data to verify $5.4 million in transfers to and from human service agencies.
Pedri said the administration will “work diligently” to get to the bottom of the record problem. He stressed no cash is missing and said the corrections will either cause the county’s overall surplus to stay the same or increase.
“This will not reduce the surplus,” he said.
