TimesLeader.com

Eachus criticizes Barletta

State House majority leader writes critical letter over financial moves.

By Steve Mocarsky smocarsky@timesleader.com
Staff Writer

HAZLETON – In response to a request for help from city Mayor Lou Barletta, state Rep. Todd Eachus on Wednesday sent the mayor a letter criticizing his actions related to the city’s pension fund and called one of his recent financial moves “reckless.”

The city is facing a major financial crisis because, in addition to facing an approximate $500,000 budget deficit this year, the state Auditor General had determined in 2006 that the city must repay $1.5 million in improperly spent pension money to the state.

Auditor General Jack Wagner said the city improperly used a portion of special tax revenue designated for police and firefighter pensions to pay for retirees’ health-care benefits and to buy back unused vacation and sick leave from employees who accepted an early retirement incentive.

The city appealed Wagner’s determination, and The Times Leader reported Tuesday that an administrative hearing officer last month upheld the auditor general’s determination. Barletta plans to appeal to Commonwealth Court.

Barletta, a Republican serving his third term as mayor, said on Monday that he was “working with” Eachus, the House majority leader, to reintroduce Senate Bill 961, which would allow the city to use a portion of municipal pension tax revenues to pay for health benefits of retired firefighters and police officers.

Barletta said the auditor general agreed that the bill, if passed, could be retroactive, and he would release the city from having to pay back any money into the pension fund.

The bill was approved by the Senate 49-0 in 2007 but was buried in the House Financial Committee.

In his letter, Eachus pointed out to Barletta that Wagner ruled in 2006 “that the diversion of this pension fund money was ‘improper’. Unfortunately, you escalated the practice for another two years and included it in your 2009 budget proposal, despite the Auditor General’s opinion. Last month, that ruling was upheld.”

Eachus wrote that between 2003 and 2006, Barletta “chose to transfer $1,593,122 out of the city’s pension fund, knowing that legal grounds for this transfer were questionable at best.” He said Barletta transferred another $429,304 in 2007 and $462,000 in 2008 and proposed a transfer of $500,254 in 2009, bringing the amount of “improper” pension transfers to $2,984,680.

“Something must be done to get the city out of this bind, but I want to make it clear that any solution must be within the confines of the state law and the state Constitution. It will be a challenge to fix the city’s mistakes, but I have asked my staff to determine what options, if any, we can take. While we work to find a solution, I suggest you also begin examining alternative options,” Eachus wrote.

Eachus “strongly recommend(ed)” that Barletta stop diverting pension funds “so you can avoid making Hazleton’s $3 million pension problem even worse,” he wrote.

In a phone interview on Wednesday, Eachus called Barletta’s initial decision to use the pension funds for retiree health benefits “a gamble” and criticized Barletta for continuing the practice after Wagner’s ruling “when he knew it was illegal and improper.”

“Then he wants a legislative solution to change the law that he broke,” Eachus said.

Eachus said he’s busy working to try to balance the state budget, which he said is “facing the largest deficit since the Great Depression” – $3.2 billion – and trying to find a fix for the city’s problem right now is impractical. He also said case law wouldn’t allow for retroactive reimbursement even if the bill were passed. so the city would still owe the pension funds $3 million.

Barletta said he appreciates how busy Eachus is. “And if he wants to blame me for trying to save the city, so be it.”

The mayor said he felt he had no other option than to make the financial moves that he did.

Barletta noted that the Senate passed Bill 961 unanimously, and that it had the support of the Auditor General and the Pennsylvania Employees Retirement Commission. He pointed out that is was the House of Representatives who buried it.

“The consequences of continued inaction or opposition by the House will be devastating to Hazleton. … I hope with all my heart that politics did not come into play. I hope Rep. Eachus is not serious about blocking legislation that would protect the police officers, firefighters and citizens of Hazleton,” Barletta said.

Barletta said it seems that Eachus is “trying to find a reason not to help the city. He should be our loudest voice in Harrisburg fighting for this rather than trying to find reasons why it shouldn’t pass.”

Barletta said it’s ironic that the bill is facing opposition, even though it would harm no one.

Referring to his decisions regarding the retiree health benefits, Barletta said they “made sense. Maybe that’s why it’s so confusing to the people in Harrisburg,” he said.

Read state Rep. Todd Eachus’ letter to Mayor Lou Barletta at www.timesleader.com.