Last updated: February 19. 2013 10:01PM - 543 Views

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Luzerne County Councilman Edward Brominski cautioned his colleagues Thursday against voting on a budget that knowingly contains $4.3 million in iffy revenue.

To do so may be considered an act of malfeasance, he said in an email to council.

Brominski said the county's outside tax claim operator, John Rogers, said he can commit only about $8 million from back taxes based on historical performance, while the proposed operating budget counts on $12.3 million.

The councilman said he can't in good conscience vote to approve the budget unless county Manager Robert Lawton shows how he intends to collect the remaining $4.3 million. He suggested an emergency meeting.

Lawton said Thursday he would recommend a cash-advance on delinquent taxes – an option known as monetization – if the administration can't spend less than budgeted or exceed budgeted revenue during the year.

A majority of council rejected the option of monetizing earlier this year, largely because the county must give up a portion of receipts for fees.

Lawton said he will recommend moving the $4.3 million into a monetization budget line – with the understanding the option may not be necessary – to quell concerns.

If that's done, council members who approve the budget must openly accept monetization as an option.

Council members weigh in

Councilman Jim Bobeck said he's willing to monetize, if necessary.

With massive inherited debt and mandated service obligations, the county will monetize, for cash-flow purposes, where necessary, for 2013. Defaulting and further reckless borrowing are not options, he said.

Councilman Eugene Kelleher said he's willing to publicly endorse the manager's potential usage of monetization at the end of next year, if necessary, so there's no confusion about his stance when he votes for the budget Monday.

Kelleher also said the inclusion of potential monetization revenue in the budget is not comparable to past commissioners' controversial decision to budget revenue from the sale of the former Valley Crest Nursing Home property, because the back-tax revenue is owed to the county and available for a cash advance.

The Valley Crest sale did not materialize and was not a guaranteed revenue stream. This is, Kelleher said.

Councilwoman Elaine Maddon Curry said she also would accept monetizing, in part because the option won't be considered until the end of the year as a last resort.

This is the stark reality of the situation we find ourselves in. We're doing our absolute best to stabilize the financial condition of the county, she said.

If council fails to adopt the no-tax-hike $122.25 million budget Monday -- the deadline under home rule -- the county must continue using the 2012 budget next year.

Reduced spending, layoffs

The proposed 2013 budget reduces overall spending by $383,490 while absorbing a $2.8 million increase in debt repayments and additional $1.7 million in raises and length-of-service bonuses mandated by union contracts, Lawton said. The budget also eliminates 50 vacant and filled positions, resulting in 27 layoffs.

Lawton said he's optimistic he will cover at least some of the $4.3 million because many budgeted revenue amounts are conservative and prudent. He also expects savings because eight division head positions won't be filled in January.

He does not believe monetization is the same as taking out new loans to pay operating expenses – another past county practice – because the county is essentially speeding up its receipt of back taxes due.

It's not borrowing against future revenues, Lawton said.

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