Luzerne County Government

January 7, 2010

Luzerne County’s whopping debt built up gradually

Since 2002, the commissioners relied heavily on borrowing to fund projects.

By Jennifer Learn-Andes jandes@timesleader.com
Luzerne County Reporter
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A child born today will reach adulthood by the time Luzerne County pays off its $466 million debt.

County taxpayers must shell out roughly $25 million annually over the next 17 years, wrapping up with a final payment of $21.3 million in 2027.

County officials have halted new borrowing and expressed outrage over the money owed, but nobody has really explained how the debt ballooned to nearly half a billion dollars.

The county’s reliance on bonds started gradually.

At the start of 2002, the county owed $130 million in debt.

This lump was scheduled to be paid off by 2023, with annual payments gradually decreasing from $6.6 million to $2.4 million.

Then-commissioners Tom Makowski and Tom Pizano voted in March 2002 to borrow $25.6 million to fund an array of capital projects, including improvements at the county-owned nursing home and a terminal expansion project at the Wilkes-Barre/Scranton International Airport.

Shickshinny taxpayer Frank Jescavage unsuccessfully pleaded with them to reconsider borrowing so much money.

“We can’t afford to do some of these things. The taxpayers are burdened to the hilt with taxes and nobody’s going to tell me that if you borrow $25 million that our taxes are not going to increase,” Jescavage said at the time.

In January 2003, Makowski and Commissioner Stephen A. Urban voted to borrow $27.5 million to finance reassessment, construct a new $9 million juvenile detention center, buy watershed land and complete other projects.

That November, all three commissioners – Urban, Makowski and Pizano – voted to borrow $32.5 million for the River Common revitalization and other capital projects.

By the time former commissioners Todd Vonderheid and Greg Skrepenak joined Urban on the board in 2004, the county owed about $284 million in bond debt, records show.

Vonderheid and Skrepenak saw borrowing and debt restructuring as more than a means to fund capital projects and used them to cover operating expenses and avoid tax increases.

The two commissioners borrowed $17 million in 2004 and $12.5 million in 2005 to fund deficits.

They also borrowed $11.52 million in 2005 to fund an early-retirement incentive and restructured debt in 2006 to obtain $12.3 million in exchange for higher debt repayments down the road.

Outstanding debt had escalated to $309 million by the summer of 2007, but the borrowing continued.

Skrepenak and former Commissioner Rose Tucker, who had replaced Vonderheid, voted in November 2007 to borrow up to $93.5 million to fund another budget deficit, Luzerne County Community College expansion and capital projects such as courthouse restoration.

The borrowing was delayed by former Wilkes-Barre resident Tim Grier’s legal challenge, but commissioners closed on the bond – reduced to an $87.89 million package -- in June 2008. About $18 million was used for the deficit.

Another $5.3 million was borrowed in 2008 to cover budget shortfalls.

Commissioner Maryanne Petrilla and Urban passed a 2009 budget that included the borrowing of another $18.2 million.

Over the years, commissioners did not pay off portions of bonds when projects were scrapped or altered.

For example, the county did not build a juvenile detention center, and state and federal funding reduced the county’s share of the River Common revitalization project. Instead, commissioners used this money for other projects because bond ordinances contained clauses that money could be used for “various capital projects.”

Commissioners have earmarked millions of county bond funds for non-county athletic fields, park improvements and revitalization projects in recent years, arguing that investments must be made in communities.

Critics have challenged the county’s willingness to overextend on projects outside the realm of county government.

Commissioners acknowledge that the debt load has spiraled out of control.

Commissioner Thomas Cooney, who replaced Skrepenak last month, has identified county debt as a significant concern, saying it will cost taxpayers $60,000 per day next year.

Petrilla and Cooney have passed a 2010 budget that raises taxes 10 percent with no new borrowing, though the tax rate could increase or decrease if the budget is revised by Feb. 15.

The county has used up most of its capital projects bond money, with the exception of most 2008 bond proceeds and about $1.2 million left from one of the 2003 capital projects bonds, records show.

County Budget/Finance Chief Tom Pribula, who has pushed to get off borrowing, said years of fiscal stability could allow the county to refinance debt at a better interest rate and lower payments.

The county is currently paying a maximum interest rate of around 8 percent on some of its debt, he said.

“There could be a time when we pass on a tax reduction to residents,” Pribula said.

Jennifer Learn-Andes, a Times Leader staff writer, may be reached at 831-7333.

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