Click here to subscribe today or Login.
A final audit released Friday confirmed Luzerne County’s deficit is now $8 million, and county Manager C. David Pedri said it will be further reduced to around $3 million by the end of the year if all goes as planned.
“We are absolutely on track to get out of the deficit within the next few years and start building a reserve with money in it,” Pedri said Friday.
As hinted in a draft audit earlier this week, the final version concluded the county ended 2016 with a $1.375 surplus that was applied to reducing the $9.35 million general fund operating fund deficit on the books.
While council has the final say, Pedri said he won’t recommend touching the $4 million proceeds from settling baseball franchise litigation with Lackawanna County this week.
If that $4 million is still sitting in the bank the end of this year, it would cut the deficit in half.
Pedri also expects to clear approximately $1.2 million from an expired tax-break program this year, which would bring the deficit down to $2.8 million.
The money is from a Tax Incremental Financing, or TIF, program in which the county, Wilkes-Barre Area School District and Wilkes-Barre Township temporarily sacrificed property tax revenue from new development along Highland Park Boulevard and at the Arena Hub Plaza in the township to fund infrastructure improvements on Highland Park and Mundy and Coal streets.
Pedri is preparing to brief council on plans to recoup the money. Some have argued the county is entitled to a bigger share, and Wilkes-Barre officials have maintained money should be left in the pot to further extend Coal Street, although the city never gave up tax revenue to fund the infrastructure.
Keeping windfalls set aside may be a challenge amid other needs.
The proposed capital budget leaves only $1.2 million to cover repairs and other projects unless the county borrows again before the current debt is repaid in a decade. The audit says the county owes $325.1 million, including interest.
The county also remains a year behind on its employee pension fund subsidies, causing the fund to miss out on investment earnings. Officials would have to come up with approximately $9 million before the end of this year to get caught up on that subsidy.
Despite continued fiscal pressures, Pedri said the progress whittling down the deficit and completion of on-time audits with a surplus two years in a row are evidence the county has shown marked improvement.
He said he plans to approach Standard & Poor’s seeking a credit rating boost, possibly this month.
The agency had lowered the county’s credit rating two notches in November 2015 from investment grade to a speculative BB+.
A more favorable rating could allow the county to refinance remaining variable rate debt at fixed rates, Pedri said.
“We are in a better position than the county has been in a long time due to the hard work by council and the administration. The credit rating, hopefully, will reflect all our hard work,” Pedri said.
According to the audit, judicial expenses were approximately $830,000 under budget in 2016, while public safety spent about $1.5 million less than budgeted. Meanwhile, human services spending exceeded budgeted allotments by $679,000.
Some other audit findings:
• Correctional expenses increased approximately $1.3 million from 2015 to 2016 primarily due to higher payments for pensions and inmate health insurance. Total prison system spending was $33.76 million in 2016.
• Community and economic development expenses increased by approximately $6 million from 2015 to 2016. This stems primarily from additional funding for flood recovery, county officials said.
• Interest on long-term debt decreased by approximately $4.2 million from 2015 to 2016 due to the county’s refinancing of some debt into a new lower fixed rate.
• Employees paid $3.86 million toward their pensions in 2016, while benefits paid to retirees totaled $16.6 million for the year.