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‚??Glitches‚?? holding up tax revenues

February 16. 2013 2:45PM
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While $3.7 million in earned income tax revenues sit waiting to be disbursed, many governmental entities in Luzerne County are seeing coffers grow perilously low.

For weeks the Luzerne County Tax Collection Committee and the agency that collects those taxes have been squabbling over why funds have not been properly distributed to the county's municipalities and school districts.

"I feel horrible," said John Bolin, chairman of the county tax committee and a member of the Wyoming Area School Board, which has been sent about $150,000 less money than at this point last year. "I understand everybody's troubles."

Throughout the county, municipal leaders have shared stories of shortfalls and hardships the lack of proper disbursements have created.

Nanticoke shortfall

As the legal wrangling plays out, some towns such as Nanticoke couldn't wait any longer to get its rightful tax dollars and had to take out a $400,000 tax anticipation note to pay its bills.

City Manager Pam Heard, who also serves on the county committee, said Nanticoke is $320,000 behind last year's payments, and the tax anticipation note, which is a loan from a lending institution that would cover the budget shortfall, was the city's only recourse while the county and tax collection firm are working out their issues.

At Wednesday night's supervisors meeting in Kingston Township, Chairman James Reino Jr. said the township is more than $600,000 short of this year's budget due to the late-coming dollars.

After this month's bills are paid only $143,000 remains in the general fund. The board voted to seek proposals for a tax anticipation note.

In other townships such as Dorrance, Rice, Lake and Lehman, small portions of expected tax remittances have been noted at public meetings over the past two months.

Through Tuesday, Lake Township has received only about 30 percent of what it had at that point last year, said Township Secretary Carlene Price, who serves as a voting delegate to the county tax collection council.

"We're lucky enough that we're keeping our head above water right now, but there are some others that will be in the red within the next month or two," Price said.

Company unavailable

The company hired by the county to handle the tax collection, reconciliation and disbursement is Centax-Don Wilkinson Tax Agency, based in Bridgeville, near Pittsburgh.

Repeated attempts to leave a message or to talk with someone at the company were unsuccessful Thursday as calls were disconnected or no one answered the corporate office's phone.

That company has told tax collection committee solicitor Jeff Malak that turnover, computer glitches and other issues have led to the problems, but they were being addressed and rectified.

The delegates will meet Aug. 22 and an agenda item is going to be Centax's contract and whether it should be voided.

Malak said that if the company shows that it has acted in good faith to address the county's concerns and can show that it has taken action to correct them, the company may be able to show it has met its contractual obligations.

But he said delegates could opt to look at the year-to-date work the company has done and decide to nullify the contract and seek requests for proposals from other firms.

"This could wind up in court either way," said Malak, who added he believes the committee would be within its rights if it ended the contract based on provisions in Act 32, the law that was created to simplify tax collections.

"It doesn't seem to working that way," Malak noted.

Media reports from around the state show other counties having similar problems with Centax. At least two counties, Armstrong and Beaver in western Pennsylvania, have reportedly given the company the required 90-day notice to sever their contracts with Centax.

Kingston up to date

Kingston Administrator Paul Keating said that unlike many municipalities in the county, his has fared well in receiving money from Centax.

"We're right about where we were last year," he said, but added the caveat that the borough increased its tax rate this year from 1.95 percent to 1.99 percent so it should have been bringing in more money.

Price expressed hope that an emergency meeting would be called next week to address the contract and move on with hiring a new company, but Bolin said that with advertising requirements and costs, it was decided to wait the extra few days until the regularly scheduled meeting.

Bolin said that even if the contract is ended, by the time a new company is brought in and begins the process of transferring records, it may be September or October before the new company begins disbursing funds.

That could be too late for some municipalities, Price said.

Road projects need money up front to move forward, payrolls need to be made, bills need to be paid, she noted, all of which require the money that municipalities are rightfully entitled to and rely on to balance their budgets. Without that money flowing in, Bolin agreed, "it could be devastating."

Bolin said the county "was led down the wrong path" in selecting Centax, and by the time people realized the glitches and issues, it was too late.

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