Judge grills Petrilla on ’08 deficit

Luzerne County Court of Common Pleas Judge Ann Lokuta said she needs time to rule on the county’s request to borrow up to $15.9 million for the 2008 deficit.

After a second day of testimony lasting more than three hours Tuesday, county officials did not leave the courtroom with a mood of confidence that Lokuta will rule in their favor.

Commissioners say the borrowing package must be executed soon so they can obtain the money before the county runs out of cash in mid-November. An emergency backup plan is in the works, but county officials won’t talk about it until they receive Lokuta’s ruling.

County Commissioner Chairwoman Maryanne Petrilla was the only person to testify Tuesday, called to the stand by property owners Walter Griffith and Ed Chesnovitch.

If Lokuta grants the request, she warned during Tuesday’s hearing that she is not obligated to “carte blanche” authorize the full amount requested by the county. She also noted that she denied a past borrowing request from Hanover Township because the municipality didn’t meet its burden of proof.

To allow unfunded debt loans, a judge must determine that tax revenue came up short and overspending and shortfalls could not be foreseen, according to the Local Government Unit Debt Act. The county must also prove that failing to pay the debt would be dangerous to “public health, safety or education.”

However, $8.2 million of the expenses identified as unforeseen and unbudgeted had already been paid by the county before officials realized that budgeted revenue would fall short. Lokuta made an issue of the county’s failure to come to court before the unbudgeted expenses had been paid.

A $2.3 million employee pension fund subsidy for 2008 is the only remaining unbudgeted expense to be paid.

Petrilla said the county paid the other previously “ignored” bills before learning that millions in revenue budgeted from property taxes, debt restructuring, county land sales and a 911 funding stream would not materialize.

Lokuta also repeatedly asked Petrilla about options to whittle down the requested dollar amount so the county eliminates nonessential services without jeopardizing public health and safety. She mentioned Griffith’s use of the word “scare tactic” to create the impression that the county will come to a “grinding halt” if the county doesn’t receive $15.9 million.

“This county cannot keep hemorrhaging as it has been,” Lokuta said at one point.

Petrilla said the $15.9 million estimate came from the county’s financial advisor, but the county won’t borrow that full amount if it’s not needed.

Lokuta said there seems to be a “great deal of fat” in the county and questioned whether “cronyism” led to some of the fiscal problems. She recalled questionable debit-card charges for “strip clubs” and “junkets to some very exotic places.”

As an example of a possible cut, Lokuta cited part-time senior judges who have full-time staff and chamber offices. She said a court representative should have been asked to testify about potential cuts. Lokuta said she pays attention to costs in her office.

“I’ve been living with a chair that doesn’t fit me for 17 years,” she said, also mentioning her lack of a podium and courtroom microphone.

Lokuta also pondered why county Commissioner Greg Skrepenak did not alert commissioners to one of the unbudgeted expenses – $2.2 million owed to Luzerne County Community College dating back to 2006 and 2007. Skrepenak served as a college board trustee during those years and is currently trustee vice chairman.

County Solicitor Vito DeLuca, who represented the county along with Jim Blaum, said the deficit was caused by “monumentally bad accounting decisions” made by the previous administration, and he was “floored” when he was briefed on the matter.

He said this “misappropriation and misbudgeting of millions” is an unusual occurrence, and county officials started looking for solutions when they discovered the severity of the problem around the end of July. He said county officials did not “sit around all summer” ignoring the fiscal problems.

Blaum said there’s no evidence of money missing, just revenue shortfalls and unbudgeted expenses.

He said the county has been proactive about reporting suspected theft. Blaum said the borrowing request was not taken to court “lightly,” and he said Petrilla and minority Commissioner Stephen A. Urban exhibited “courage” by being proactive about addressing the problem.

Griffith grilled Petrilla on why she did not try to reopen the budget when she became commissioner in January. He also questioned why she was not aware of budget problems in her previous job as county controller.

Petrilla said she repeatedly asked former budget/finance chief Sam Diaz about the 2008 budget after Urban had publicly called the spending plan a “shell game.” Petrilla said Diaz kept assuring her that the budget was sound.

County controllers have no legal control or authority over the county budget, she said.

After Tuesday’s hearing, Petrilla said she understands why taxpayers are objecting to another borrowing request, after years of borrowing for deficits.

Petrilla said she and other county officials want 20 percent spending reductions in all departments next year. She complained that the court system’s preliminary budget proposal requests an 18-percent increase. Row offices and the court must “respect” that the county is in a fiscal crisis, she said.

“We will have the firmest, strictest 2009 budget that this place has ever seen,” Petrilla said.