Luzerne County amassing multimillion dollar windfall

By Jennifer Learn-Andes - [email protected] | August 25th, 2017 10:27 pm

Instead of their usual predicament of scraping together money, Luzerne County council members must decide what to do with a rare $5.9 million windfall that may grow to $8.6 million by year’s end.

“That’s a big deal, ladies and gentlemen,” county Manager C. David Pedri told council members during his mid-year budget report this week, describing it as a “happy decision.”

He said the guaranteed $5.9 million comes from these one-time receipts:

• $550,000 in additional, unbudgeted state revenue obtained by Domestic Relations Director Jim Davis and other court workers.

• $811,000 from council’s prepayment of Children and Youth expenses last year.

• $4 million in proceeds from settling baseball franchise litigation with Lackawanna County.

• $540,029 set aside in this year’s budget as a reserve that Pedri said the administration won’t touch.

The county received another unbudgeted $217,000 from a workers’ compensation dividend, but that money must be tapped to cover emergency HVAC repairs at the county-owned human services building in Wilkes-Barre, he said.

Another estimated $2.7 million may be available by year’s end if the county reaches an agreement to disperse funds left from an expired tax-break program plus proceeds from a proposed debt refinancing scheduled for a council vote in September, Pedri said.

What options may be considered for this money?

Pedri said it can put a small dent in outstanding debt, significantly reduce or clear the deficit, or allow the county to catch up on employee pension fund subsidies that have been a year behind.

He does not support using the money for ongoing operating expenses, saying relying on one-time revenue to balance the budget is not sound fiscal practice and could create future shortfalls.

His take on the other three options:

• Debt reduction — Pedri doesn’t recommend applying the up to $8.6 million toward the $300 million in outstanding debt.

“If you had a $300 credit card bill and paid $8, it’s not going to change it that much,” he said.

• Deficit erasing — He supports earmarking some or all of the funds to help clear the county deficit, which was tallied at $8 million at the end of 2016.

“This could completely take us out of our deficit from overspending in 2012, 2013 and 2014,” Pedri said.

• Pension subsidy — County officials started delaying annual payments to shore up the fund years ago. The county paid last year’s subsidy in April, which was an improvement from the prior year’s June, he said. However, approximately $7 million is needed for the 2017 subsidy to be paid the year it’s due, he said.

Delayed payments cause the pension fund to miss out on investment earnings, officials say.

Pedri supports using some or all of the money for this purpose, saying “at least this money is going to start making us money.”

The manager’s preference would be spending portions of the windfall on both the pension subsidy and deficit.

911 upgrades

Pedri suggested council members meet with Harrisburg-based consultant Public Financial Management (PFM), the county’s financial adviser, in the fall to discuss the pros and cons of these options.

Councilman Eugene Kelleher proposed another potential use of the funds — partial payment of an estimated $19.26 million for an emergency 911 radio communications system overhaul.

The county’s dwindling capital projects reserve has no money earmarked for this project. A consultant has said the switch from an analog to digital system is crucial because the radio transmitters and receivers that allow emergency responders to exchange messages will become obsolete in 2020. Officials have said it’s highly unlikely any state funding will help pay for the switch.

Kelleher asked if the administration has discussed any ideas on how to fund this project.

Pedri said staffers will aggressively seek grants and explore the possibility of a public safety fee. He does not yet have specifics on how a fee could be structured or whether it is a viable legal option. He acknowledged new borrowing may be the only option if funds are not identified.

“It has an end of life in 2020, so we need to make a determination as to how we’re going to fund it,” Pedri said. “Some of these funds could be utilized for that if that’s something county council wants to do.”


By Jennifer Learn-Andes

[email protected]

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