Luzerne County manager proposes 3 percent tax hike in 2019

By Jennifer Learn-Andes - [email protected]
Pedri -
Luzerne County Courthouse -

Citing rising expenses and past unrealistic revenue streams, Luzerne County Manager C. David Pedri has asked county council to raise taxes 3 percent in 2019.

The hike would increase county real estate taxes $18 on a $100,000 property, with the total tax bill rising from $597.54 to $615.47.

“The (proposed) 2019 budget is a sustainable budget,” Pedri told council during his Tuesday night presentation of the suggested $140.95 million general fund operating plan. “As manager, it is my job to seek out the best options and standing going forward.”

Council is free to alter the proposal before final adoption, which is set for Dec. 11. Several budget work sessions have been scheduled before that date.

Pedri said the hike would generate an additional $3.15 million to cover $2.5 million in increased expenses and a revenue decline.

His breakdown of the $2.5 million in rising expenses includes increases in these categories: pension subsidy, $570,000; health care, $280,000; district attorney capital cases and witnesses, $210,000; and prison health care and overtime, $400,000.

Personnel costs also are set to rise $483,000 due to union-negotiated raises and merit-based raises of up to 3 percent that Pedri is seeking for non-union workers, he said.

The requested tax hike would be higher without another proposed change in the budget involving the contingency reserve, Pedri said.

This year’s budget includes a $4.9 million contingency. This is essentially money earmarked for emergencies that cannot be touched without council authorization.

Pedri’s proposed budget reduces the contingency to $1.05 million next year so the remaining $3.9 million can help cover a debt repayment increase. Debt payments are rising by $4.26 million next year, for a new total $25.04 million.

Revenue expectations must be reduced $790,000 because several receipts have been over-aggressively budgeted for several years in probation, domestic relations and the prior-year taxes category, he noted.

More arguments

While the county is no longer carrying a deficit on its financial books, Pedri told council there are still fiscal challenges.

The administration plans to seek council approval next year for a borrowing/refinancing to fund a 911 emergency radio system upgrade and new voting machines with a paper trail.

Combined, the two projects have been estimated to cost up to $24 million. Pedri said he does not yet know the amount that will be needed but estimated it would likely be “eight figures,” or at least $10 million.

Pedri said he is concerned passage of an insufficient budget would negatively impact the county’s credit rating, and thus the interest rates on new borrowing.

The county received a BBB- credit rating from Standard & Poor’s in August 2017, which lifted the county out of a speculative pool into an investment-grade position.

The 2017 budget was “tight” with a $180,000 surplus when one-time windfalls, such as $4 million from a baseball franchise litigation settlement, were stripped out, Pedri said. He predicted the county will end this year with a $250,000 surplus, which he further held out as evidence of a lack of budget flexibility and liquidity that could boost the credit rating.

The county still has approximately $5.8 million in the bank from this year’s unspent contingency.

Council must decide whether to use the money to build a permanent savings account, bolster the dwindling $600,000 capital projects fund or prepay next year’s budgeted expenses. Some officials have expressed past concerns about the last option because it would leave a void the following year when the cushion is no longer available.

Councilman Stephen A. Urban said property owners already are burdened with “outrageous” taxes when school and municipal ones are factored in, and he won’t support a hike. The contingency should be tapped, if necessary, to avoid a tax increase, he said.

Councilman Edward Brominski said elderly property owners on fixed incomes can’t afford to pay more, and he called for the manager to present a 3 percent tax reduction.

Councilman Harry Haas also said cuts are warranted.

“Government tends to creep and grow, and we’re trying to curtail that,” Haas said.

Citizen Brian Shiner said the county is “headed in a positive direction” but should not raise taxes.

”I don’t know whether to laugh or cry,” Shiner said of the proposal, urging officials to follow the expectation for citizens to “do more with less.”


Luzerne County Courthouse County Courthouse

By Jennifer Learn-Andes

[email protected]

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.