Luzerne County may continue its tradition of running out of cash before the end of the year, officials say.
Citizen Walter Griffith, a former county controller, raised the issue when he asked for the county’s cash balance during a question-and-answer session with county Manager Robert Lawton and his senior staff Tuesday.
Budget/Finance Division Head Brian Swetz told Griffith the county has about $49.2 million in the bank to cover general fund operating expenses.
The outstanding bills include an $18.2 million tax revenue anticipation loan that must be repaid June 30 and around $27 million in debt repayments due in November, Swetz said.
The county already received about 75 to 80 percent of its property tax payments — the county’s main revenue stream — though Swetz said he expects another boost in collections before penalties on county taxes kick in next month.
Swetz said he is compiling a projection of expected receipts and payment obligations through the end of the year to make the annual cash flow struggle “as smooth as possible.”
The county also informed businesses that provide services and supplies they will be paid every 45 to 60 days instead of 30 days to help “bridge the gap,” he said.
Griffith said the county also faces payroll expenses totalling around $1.5 million every two weeks.
“We’re on a real slippery slope to not having any money by October,” he said.
Year-end cash shortfalls have been a problem in the county for years, with the latest audit showing the county ended 2012 with a $3.7 million deficit.
Lawton said Tuesday the undetected double-counting of $3.8 million in tax revenue in the 2012 budget was a “huge part” of the shortfall.
Some prior commissioners resorted to outside loans to pay bills and operating expenses, but that’s no longer an option because the practice helped balloon the county’s outstanding debt to more than $400 million. Lawton said he has been forced to temporarily borrow from other county funds and continue relying on tax anticipation loans because the county has no healthy cash reserve that can be tapped.
Lawton said his goal is to build a reserve over time through years of spending less.
“We have to earn this back over time,” he said. “It’s not enjoyable. It’s not pleasant. It’s not great, but it is what it is.”
Councilman Harry Haas asked the administration about options to reduce expenses now, such as keeping vacant positions unfilled, to “minimize the crisis we can see later in the year.”
Lawton said most of the 50 vacancies are in human service branches largely funded by the state and federal government, as opposed to the strapped general fund operating budget at issue.
“I think we’ll have a better sense mid-year about the existence or extent of a crisis,” Lawton said.
2013 audit due
The county also is awaiting a status of county finances with the 2013 audit, which is due June 30 under the home rule charter. That deadline won’t be met, even with a draft version, because the budget/finance office needs more time to supply information to the auditor.
Swetz attributed the delay largely to required training for new staff and the unanticipated need to reconstruct months of payment and revenue postings to ensure they were credited to the proper budgetary accounts in multiple departments.
Lawton’s presentation included a five-page report and explanation of each 2014 expenditure running over-budget.
Councilwoman Kathy Dobash said she requested the information so problems could be identified and rectified soon enough to prevent overspending.
Lawton asked Swetz if he has detected any overspending that “should set our hair on fire.” Swetz said he is still reviewing finances in detail for the mid-year report but said he did not find anything alarming to date in salaries, which would be his primary concern.