Luzerne County Manager Robert Lawton’s proposed 2014 budget calls for an 8 percent tax increase and contains a $2.77 million gap that will be closed with roughly 55 layoffs if employees don’t offer up concessions.
“We are severely fiscally challenged, and we will be for some time to come,” he said Tuesday evening.
Independent of these potential layoffs, Lawton said he must cut an estimated 50 non-union positions between now and Jan. 1 to fulfill county council’s mandate to start switching the workforce to 37.5 hours by Jan. 2 without impacting the bottom line by paying some to work more hours.
Another estimated 160 employees would have to be cut if council does not approve the tax hike, which would generate about $8 million, Lawton said. The 8-percent increase is the maximum permitted under the county’s home rule charter without going to court.
Layoffs, outsourcing and unfilled vacancies in recent years have reduced the county workforce to around 1,450 full-timers, compared to around 1,630 employees at the start of 2011.
The budget, which contains $127.48 million in expenses and $124.7 million in revenue, does not factor in any increases for employees covered by six collective bargaining agreements that expire at the end of this year, he said.
Lawton said some cuts were made, but additional revenue is needed to cover “major increases,” including a $2 million rise in health insurance costs, $1.7 million in additional subsidy to the employee pension fund and $1.5 million more for union raises and length-of-service bonuses.
The county also will lose this year’s $4.3 million from seeking a cash advance on delinquent taxes owed to the county, he said. That back-up plan, known as monetization, won’t be available in 2014 because the pool of available taxes will be nearly depleted with this year’s cash advance, he said.
The 2014 budget also must absorb $300,000 in lost revenue from the civil court records office that was over-estimated in the past and a $900,000 decline in state reimbursement for domestic relations, he said.
Council will hold several public budget work sessions before voting on the budget in December. The budget will be posted on the county website, www.luzernecounty.org.
An 8-percent hike would increase the county’s tax millage rate from 5.32 mills to 5.7456 mills. That means the owner of a property assessed at $100,000 would pay $42.56 more, with a bill increasing from $532 to $574.56.
Property taxes are the county’s largest revenue stream, and Lawton said the tax base hasn’t been growing from new development.
His budget factors in $108.2 million from property taxes in 2014, which includes the tax increase and about $8 million from back taxes.
Lawton said he exhausted efforts to obtain revenue from fees and other sources before resorting to a tax hike.
“This is the first time in my career that I have requested a tax increase. This is not an easy thing to do,” he said as he compiled final budget summaries with senior accountant Brian Swetz and county budget/policy analyst Adam Szumski.
The $2.77 million gap would be addressed through meetings between human resources and workers, Lawton said.
A possible concession would be switching workers to a 20-percent contribution toward health care, which would save an estimated $2 million, he said.
Non-union workers have been paying 10 percent for about a decade, and most union employees pay flat monthly contributions or 10 percent toward health care. Lawton said the 10 percent payments also warrant adjustment because the amounts haven’t been upped in several years. County officials have described the health plan as generous compared to the private sector, with no deductible.
Requiring employees to pay more toward their pensions is another option, he said.
Employees have been required to contribute 5 percent of their salary into the pension fund since 1992, though the contribution had previously been as high as 8 percent.
Increasing the employee contribution to 7 percent would generate an additional $1 million, Lawton said. However, there’s a price to be paid down the road: increased employee payments will raise the pensions that must be paid in the future.
Changes in uniform and clothing allowances and other employee benefits also could “nibble around the edges” of the gap, he said.
Lawton said he is seeking “joint participation” from the workforce to share the burden without reducing health care benefits or guaranteed pensions, though he stressed he is fully prepared to impose layoffs if those efforts are unsuccessful.
The proposed budget decreases funding for two divisions next year —budget/finance, $6.3 million to $5.4 million, and operational services, $43 million to $42.2 million.
Increases were granted to the following: administrative services, $6.1 million to $7.4 million; prison, $29.5 million to $31.3 million; courts, $24.8 million to $26.7 million; district attorney, $4.8 million to $5.2 million; and solicitor’s office, $1.3 million to $2.1 million.
The allocations in three departments remained about the same: $6.4 million for the judicial services and records division, $388,000 for the controller’s office and $2.7 million for the public defender’s office.
The county’s debt repayments are slated to increase from $25.2 million to $27 million.