If Luzerne County officials don’t raise taxes 8 percent and if no new revenue or cuts are identified, an estimated 217 employees must be eliminated, the county administration told council during Tuesday night’s first 2014 budget work session.
The breakdown would be 140 union positions and 77 non-union.
The county employs 1,478, and the administration said roughly 583 employees, or 39.4 percent, should not be considered for cuts because their salaries are primarily covered by the state or their departure would impact public safety. These departments would include human service branches, emergency management, 911 and the public defender’s and district attorney’s offices.
County budget/policy analyst Adam Szumski presented scenarios on how staff will shrink in some departments without a tax increase but said he eventually ran out of areas to cut.
For example, the number of road and bridge staffers would decrease from 30 to 10 with no tax hike, and planning/zoning would go be reduced from five to two employees.
Even with an 8-percent hike, 52 staff cuts — 35 union and 17 non-union — will be required if the administration does not obtain employee concessions to close a gap that has been whittled from $2.77 million to around $2.4 million.
Council could opt for middle ground with a reduced tax hike to lower staff cuts, and Szumski gave projections on the number of staff cuts that would be needed: 6-percent hike, 99 employees; 4-percent, 134 employees; and 2-percent, 177 employees.
Paula Schnelly, who represents more than 400 union workers, told council she was “stunned” to see the presentation indicating most of the cuts would be in her union, the American Federation of State, County and Municipal Employees, or AFSCME.
She said the union has sustained several rounds of layoffs in recent years. Some of these offices have backlogs because there are not enough workers, and cuts would prevent many departments from providing services, she said.
“Tomorrow morning is not going to be a happy day in this county,” she said.
Schnelly said she and leaders of other county unions have been meeting with the administration to discuss potential concessions to help both workers and taxpayers, and many of the suggestions being tossed around by the administration were suggested by the unions. She stressed many union workers are also taxpayers.
“We are not the problem. We are trying very hard to make this work for everybody,” Schnelly said, thanking county Manager Robert Lawton for indicating workers were not the problem.
Lawton told council the county spends a “pretty lean” 52 percent of its budget on personnel, compared to at least 65 percent or more in most counties.
He blamed much of the county’s fiscal woes next year on inherited debt repayments that will cost $27 million, a $2 million loss of state reimbursement, rising health care and pension costs and the county’s inability to obtain another cash advance on delinquent taxes that will generate millions of dollars in 2013.
Lawton said supplies have been cut and fees have been raised where possible, and there are “not a lot of places to go” for further reductions other than personnel if taxes are not raised.
The 2014 budget includes a $433,000 contingency, even though a county the size of Luzerne should have a cushion of $1.5 million or more, he said.
Lawton said debt is the big problem, and employees are not the “wolves at the gate” or the “bad guys.”
Councilman Stephen J. Urban, who already said he won’t vote for any tax hike, told Lawton he does not believe the administration has been proactive enough finding efficiencies, and he cited an examples of more turning off of lights during the work day when offices aren’t occupied and more shopping around for savings in contracts and supplies.
Lawton said he and other workers are “trying on every possible front” to reduce expenses.
“We’re not coming here lightly just because we like to spend a lot of money,” Lawton said.
Representatives of Public Financial Management (PFM), the county’s financial advisor, told council Tuesday the county currently owes $380 million on 19 outstanding bond issues through 2027, including principal and interest.
The goal is to obtain an investment-grade credit rating from Moody’s Investors Service or Standard & Poor’s needed to refinance the debt at lower interest rates to reduce repayments.
PFM representatives said the county could try to obtain at least the lowest credit rating late next year, but success would depend on a stable budget and other evidence the county is financially stable.
The county failed in its last attempt to obtain a rating in 2011, in part because of its reliance on borrowed funds to cover deficit spending, lack of a cash reserve and year-end cash flow problems.