First Posted: 1/22/2014
Luzerne County Manager Robert Lawton expressed serious concerns Wednesday over Council Vice Chairman Edward Brominski’s suggestions to reduce the county’s 8-percent tax hike.
“I would urge very careful scrutiny of these risky revenue and saving schemes,” Lawton said.
Brominski’s proposal includes budgeting $3.5 million in revenue from auctioning the county-owned former Valley Crest Nursing Home property in Plains Township and $2.5 million in savings by offering an early-retirement incentive.
Lawton said past commissioners put $4.4 million in revenue from the sale of Valley Crest in the 2011 budget, and a buyer never surfaced. Even if a sale materialized, the revenue would be a one-time fix that only “invites the same financial struggle next year,” he said.
The law requires the county to seek the appraised value, which was around $4.136 million a year ago for the 62.35-acre Valley Crest property. If there are no offers at that amount, a prospective buyer would have to obtain an appraisal and then work with the county appraiser on a compromise, officials say.
“This trip down memory lane would drag the county back to the days prior to home rule and repeats the worst excesses of using non-recurring revenue like bond proceeds and land sales to build an unsustainable, unstable, unbalanced budget,” Lawton said.
Early-retirement incentives save money only if enough positions are permanently cut to exceed the cost of providing an extra benefit enticing employees to leave, Lawton said.
The state pension law allows the employee pension fund to pay for an early-retirement incentive every five years, and the last incentive was in 2008, when 127 employees retired. While some money was saved on job eliminations and replacements at lower salaries, the incentive cost the fund $4.4 million over five years and contributed to increased taxpayer subsidy into the fund, officials said.
County commissioners had borrowed $11 million to fund an early-retirement incentive in 2004. The county also offered an incentive in 2000, though it was deemed a failure because the workforce eventually crept back to its original size.
“Luzerne County’s track record under previous pension giveaways is less than admirable,” Lawton said.
Bus service affected
County Transportation Authority Executive Director Stanley Strelish said Brominski’s proposal to reduce the county’s allocation to the authority by around $300,000 would force his agency to shut down. The authority provides bus service and vans that service the elderly and disabled.
“The authority would have to close its doors. It’s that simple. It would be absurd,” Strelish said.
The county is required by state law to provide a 15-percent match for state funding allocated to the authority, he said. Luzerne and many other counties have failed to meet this threshold, but the state has been allowing counties to incrementally increase payments over time to reach 15 percent, he said.
If the county heads in the opposite direction reducing its contribution, the state would significantly cut its allocation, Strelish said.
The county gave the authority $485,345 last year instead of the $675,000 payment that could have been mandated for the $4.5 million provided by the state, Strelish said. The county had budgeted $500,000 for the authority this year.
“We provide a service necessary to people who do not have other means of transportation. If the state money doesn’t come here, it’s going somewhere else in the state,” he said.
Brominski also proposed marketing and selling timber rights on county land, which he estimated at $500,000 in savings, and implementing an energy efficiency plan to reduce utility costs by a projected $100,000.
Alchemy vs. science
Lawton said projecting savings from timbering an unknown quantity of county land bearing an unknown quality of lumber “appears to be a matter more of alchemy than science.”
“I’m only surprised that this proposal fails to include proceeds from the baseball settlement,” Lawton said, referring to pending litigation between Luzerne and Lackawanna counties over who gets to keep $7.3 million from the sale of a Triple-A baseball franchise both counties purchased for $1 million each in 1986.
Brominski said his suggestions may not gain traction, but he believes they are worthy of research and discussion.
“All I can do is give ideas. Nobody has come up with ideas on ways to raise money or cut expenses other than taxing and firing,” Brominski said. “I think these are viable options.”
One-time revenue streams would buy the county time to explore other options to make up that difference in the 2015 budget, he said.
“I want to look at every possible way to reduce the taxes,” Brominski said.
But Lawton said a return to nonrecurring revenue sources would hamper the county’s attempt to obtain a credit rating needed to refinance debt repayments at lower interest rates.
“It’s ludicrous to think adopting these strategies will improve the county’s ability to obtain a bond rating we so desperately need to tackle our debt costs,” Lawton said.