About $2M is left in reserves to cover expenses until funds arrive

Last updated: February 27. 2014 11:38PM - 2680 Views
By - jandes@civitasmedia.com

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Luzerne County’s administration is scraping together cash to cover payroll and payments to contractors because of a delay in mailing county tax bills.

Council’s debate over altering the 2014 budget and tax rate held up the mailing, but the county’s 8-percent tax hike was not reduced by the Feb. 15 budget amendment deadline.

Bills originally were slated to go out in January but now won’t be mailed until Saturday.

“I don’t want to minimize the fiscal stress we’re under when the budget gets cracked open with no change to the tax rate,” said county Manager Robert Lawton.

The switch back to elected collectors for county taxes also may contribute to the cash-flow problem, officials say.

Another delay

The elected collectors in 69 municipalities must turn over county tax payments by the 10th of each month, which means the county won’t receive March payments until April 10, said county Budget/Finance Division Head Brian Swetz.

The administration has been considering issuing a request for elected collectors to turn over money sooner.

Property tax revenue is the county’s lifeblood. The $124.8 million general fund operating budget counts on $98 million from property tax payments this year, Swetz said.

The county has $2 million left from a temporary $18 million tax anticipation loan.

Three more payrolls must be covered before April 10, at $2 million each, Swetz said. The health insurance tab is around $300,000 per week.

“So we’re about $6 million short on health insurance and payroll through the end of March, and that doesn’t count other bills for paper, utilities and other items,” Swetz said, predicting upcoming complaints from contractors and suppliers about late payments.

The administration can borrow from the funds of various county agencies until the tax revenue arrives, but Swetz said he is still assessing if he can round up enough to cover payroll and insurance.

No reserves

The dilemma highlights the county’s precarious position with no reserve that can be tapped when promised revenue is delayed, Lawton said.

He has proposed depositing revenue from the future sale of unused county property and other unbudgeted windfalls into a reserve account. County officials have cited cash reserves of $20 million and $25 million in two other similarly sized home rule counties.

The administration has warned council about possible cash-shortage problems, but Kingston resident Brian Shiner and former county controller Walter Griffith pressed for specific information on how much money is left from the tax anticipation loan during Tuesday’s council meeting.

Shiner said he was frustrated he had to ask three times to receive an answer and believes the administration should have anticipated a potential delay in tax revenue because the home rule charter allows council to consider tax-rate amendments before Feb. 15 in the years after council elections. A higher tax anticipation loan may have been warranted, he said.

“They should lay out the severity of the problem for council and the public. People like me shouldn’t have to press. It makes it look like they’re hiding something,” Shiner said.

He also criticized the decision of a council majority to reverse in-house tax collection, saying the county wouldn’t have to wait for elected collectors to turn over money if the county treasurer’s office handled collection.

Anxious owners

The county has received numerous calls from property owners asking why they haven’t received tax bills, said Treasurer’s Office Manager/Tax Administrator Laura Beers.

Her office collects county taxes in three cities — Wilkes-Barre, Pittston and Nanticoke. The remaining city — Hazleton — and three home rule municipalities — Kingston, Kingston Township and Wilkes-Barre Township — handle county tax collection on properties in their borders.

Hazleton is the only municipality with a county tax bill that won’t be mailed by Saturday, Beers said. Most county and municipal tax bills are mailed together, and preparation of the city’s bills will take longer because city officials did not finalize their 2014 budget until Tuesday, she said.

Property owners can save 2 percent on their county taxes if they pay during a discount period through April 30. A 10-percent penalty is added to county tax bills that are not paid by June 30, Beers said.

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