City official says that with no revenue shortfall there are no plans to furlough workers

Last updated: August 17. 2013 12:26AM - 2901 Views
By - jlynott@timesleader.com

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WILKES-BARRE — More than halfway through the fiscal year the city is in better financial shape compared to the same period in 2012, officials said Friday.

Revenues are up by more than $7 million, largely because of a 25-mill property tax increase and the payment of 2012 wage taxes that had been delayed by problems at CENTAX, the former collection company. As a result, there are no plans to furlough workers to make up for a revenue shortfall.

“There is no manufactured financial crisis by a collection mishap by a third-party vendor,” said Drew McLaughlin, the city’s municipal affairs manager. “Revenue projections are holding steady so far, so we are very, very cautiously optimistic in terms of our financial position this year.”

Still, he cautioned things could change should the weather bring on an unpredictable expense caused by flooding from a tropical storm or snow in the winter. “We’re at the mercy of Mother Nature there and we proceed cautiously,” he said.

As of July 31 nearly $21.1 million in taxes has been collected, or 79 percent of the budgeted figure of $26.6 million, according to data provided by the city. For the same period last year the city collected $13.9 million in taxes. Overall for this year the city has collected about 63 percent of the $43.9 million in budgeted revenues. Expenses were at $18.7 million compared to $18.6 million for 2012.

Expenses of $43.9 million match revenues in the city’s balanced budget for this year.

Brett Kittrick, the city’s finance officer, explained why less than half of the budgeted expenses have been paid as of July 31, saying debt service, repayment of a tax anticipation note and pension payments are yet to come.

“We get hit with our main expenses at the end of the year,” Kittrick said.

In addition, payroll expense increases in the latter part of the year, McLaughlin said.

With approximately four and half months to go until year’s end, the city will be able to meet its financial obligations, he said. The optimism springs from, among other things, the nearly 90 percent collection rate of property taxes and the incremental growth in the 3-percent earned income tax over the past few years, McLaughlin said.

This year’s budget included a 25-mill increase on property taxes to 121.63 mills. Council lowered the rate from the 30 mills proposed by Mayor Tom Leighton. A mill is a $1 tax for every $1,000 of assessed property value. The increase raised the average property tax bill by $150 a year.

“I think it’s worth noting that a lot of the critics who were saying that we were going to tax people out of their homes, people weren’t going to be able to afford their taxes, is not proving true,” McLaughlin said. “The rate of collection of our property taxes is pretty much identical to what it was the year before. We’re not seeing an increase in delinquencies or anything of that nature.”

Likewise the real estate transfer tax of 3.5 percent, which had been “decimated” during the housing bubble and Great Recession, has improved, McLaughlin said. It was budgeted at approximately $800,000 this year, he said.

“When people are buying homes people have more money to spend across the economy, which helps more of our consumer taxes, the business privilege tax, mercantile taxes,” he said.

City officials will begin meeting within the next few weeks to begin drafting a budget for 2014. McLaughlin said he wouldn’t speculate on what’s in the works.

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