WILKES-BARRE — Luzerne County division heads and elected row officers gathered in an emergency meeting Wednesday morning to discuss how they can save the county from spiraling into unprecedented chaos.
While legal minds and financial experts are hashing out possible solutions to prevent mass layoffs, service cuts and defaulting on an $8.5 million debt repayment due Dec. 15, the top managers had no ace up their sleeves or secret stashes tucked away.
“Everybody in that room was sweating,” one attendee said.
Adding to the surreal atmosphere was the absence of county Manager Robert Lawton, who was out of the area, reportedly on a job search. There now appears to be seven county council votes to fire him soon if he doesn’t resign on his own, numerous sources said.
After hours of frantic phone calls and meetings, county officials did not firm up a plan to keep funding county operations beyond the Nov. 25 payroll.
The administration is scrambling because a county council majority unexpectedly voted Tuesday to reject the borrowing of $20 million to compensate for the loss of state funding during the still-ongoing state budget impasse.
All county operations are now at risk of shutting down because the administration has been keeping Children and Youth and other human service agencies operating since July 1 using money needed for payroll, debt repayments and bills in other departments.
Solicitors are researching the legality of seeking an emergency loan through the court, which may be the main option on the table. It’s unclear if the home rule charter legally allows the administration to proceed with such a loan without the county council’s approval.
Even if the administration can proceed with an emergency loan, it could take weeks to line up lenders willing to hand over money. The council’s refusal to approve the previously proposed borrowing may scare off lenders or jack up the interest rate, officials say.
The county court can file an action seeking a court order forcing the county to fund and continue operating the courts, 911, prison and other services considered essential to public safety. County court Administrator Michael Shucosky said it’s “too soon” to determine if court officials will pursue that avenue.
The idea of borrowing from the $215 million employee pension fund also was tossed out but was nixed because of concerns about the legality and ramifications, officials said.
Some have questioned why the administration doesn’t seek a tax anticipation loan now, instead of waiting for January.
County Budget/Finance Division Head Brian Swetz said that’s not feasible because such loans must be repaid within the same calendar year. He said he can’t assure lenders they would be repaid by Dec. 31 because nobody knows when the state will pass a budget and turn over money owed to counties.
County Administrative Services Division Head David Parsnik said the administration can’t proceed with any options until further research and legal opinions are obtained from county solicitors and the county’s outside financial adviser, Harrisburg-based Public Financial Management.
Parsnik said he sent notice to union leaders Wednesday that layoffs may be coming. Union contracts contain requirements for certain periods of advance notification before furloughs may be carried out.
“All division heads know what’s going on and we will continue to meet daily,” Parsnik said.
Payroll, health insurance and the debt repayment are the top priorities at this point, which means outside entities that supply services and supplies will be waiting indefinitely, Swetz said.
At least $4.5 million is owed to outside vendors through Sept. 30, with some waiting for payment since June, he said.
The $4 million left in the general fund will be enough to pay all workers on Nov. 25 and cover health insurance, Swetz said.
One payroll is around $2.6 million, and the county’s weekly $400,000 health insurance payment is automatically deducted from the county’s bank account. Swetz said he does not know if or how the county will have money to cover the two remaining payrolls in December.
In addition to impacting future interest rates, defaulting on the $8.5 million debt repayment could trigger lenders’ right to demand full, immediate repayment of more than $100 million of the county’s outstanding debt, Swetz said.
He is optimistic the county can borrow an estimated $3.5 million from accounts in various departments that are not part of the general fund, but he is not counting on much more.
Shucosky said he and other managers were asked to dig through all accounts seeking funds that can be loaned to the county to help cover payroll and the debt repayment.
Some departments have segregated accounts with money from fees or government earmarks that must be legally set aside for specific uses, such as the purchase of vehicles or computers.
Shucosky said the only remaining prospect in court branches is about $1 million in a domestic relations account that must be used for enhancements in that office. Court officials are seeking a legal opinion on whether that money can be loaned to the county for overall operating expenses, he said.
Swetz said money from domestic relations was part of his $3.5 million estimate of what can be borrowed from within.
The looming crisis was the main topic of conversation at the courthouse and many county offices Wednesday, although more than a dozen who were interviewed said they did not want to be identified out of fear that angering county officials would make them more likely targets for layoff.
“We’re all just shocked. We’re in the dark,” said one manager.
One executive secretary said said many workers believe they have become pawns in a political power struggle.
“We won’t be paid, but we’re sending a message to the governor,” she said, referring to county Councilman Harry Haas’ statement that he was voting against the borrowing due to dissatisfaction over the lengthy state budget impasse.
“Many workers are numb — numb to all the nonsense that goes on around here,” she said.
Union head Paula Schnelly said she was bombarded with inquiries from workers starting after Tuesday’s council vote and has no answers.
County workers have become accustomed to annual layoff threats in November and December as county officials hammer out the budget or wrestle with end-of-the-year cash flow problems, but the prospects of finding a solution have never been so dire, she said.
“This is a totally different twist,” said Schnelly, who represents hundreds of workers in the American Federation of State, County and Municipal Employees (AFSCME) union.
County District Attorney Stefanie Salavantis said she has received many inquiries from employees Wednesday and assured them she will provide an update as soon as she receives one.
“Right now, we’re working and continuing as usual,” she said.
County solicitors are researching the bare minimum services that must be provided if funds dry up, Swetz said.
For example, the county can’t legally open all the prison doors and release inmates out in the streets or let the 911 emergency call line go dead, he said.
The definition of “essential” services was never tested because county officials always ended up coming up with money or borrowing.
The county employs around 1,400, and many offices have been hit with layoffs or vacancies through attrition in recent years.
As one official put it: “Crime doesn’t stop just because the county has no money.”
Court officials have taken the position that their operations are an essential service that can’t be shut down, Shucosky said.
Court branches process protection-from-abuse requests, cases involving abused children and alleged crimes, family emergencies and mental health commitments, Shucosky said. A slowdown in the processing of criminal cases would force more accused offenders to remain in the already overcrowded county prison, he said.
Workers in court branches also process child support payments and monitor offenders out on probation and parole, he said.
“We can’t stop doing that,” he said.
County judges are paid by the state and were lumped into the category of essential workers who must be funded during the state budget impasse.
But Shucosky said judges can’t hold proceedings alone because they need county court stenographers, civil and criminal records office employees to accept and post legal filings and sheriff deputies to transport inmates and provide courtroom security.
County Human Services Division Head David Schwille said the county is legally required to provide protective services for children and the elderly.
Prior county commissioners had discussed “essential” services in 2007, when their efforts to obtain a $15.6 million bond to cover bills and repay a $10 million tax anticipation loan were challenged by a citizen. Although commissioners ended up scraping together the money, their threatened “nonessential” work stoppage plan would have furloughed 50- to 75 percent of the workforce. They had planned to keep the prison and 911 staffed and allowed road and bridge workers to be called out only for snow plowing or emergencies on the hundreds of miles of county-owned roads scattered throughout the county.