Last updated: February 17. 2013 8:41AM - 150 Views

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WILKES-BARRE – After reportedly failing to get concessions from the city's unions, Mayor Tom Leighton could next turn to taxpayers for help with his 2013 budget.


He will release his plan on Monday in order to meet a mandated deadline.


As the announcement approaches, Leighton, who began his third, four-year term in January, has kept quiet about the details.


But top officials in his administration last week offered some insight on what's been going on to balance revenues and expenses, and what to expect next year.


"I would say we're looking at everything," Marie McCormick, city administrator, said.


"All options are on the table at this point. We have a laser focus right now putting together the 2013 budget and getting out of 2012," Drew McLaughlin, the mayor's assistant, added.


This year can't end soon enough for the city as it waits for millions of dollars of tax revenue stranded in the mess left by the Centax/Don Wilkinson Agency collection firm.


The company has paid a portion of the nearly $11.2 million in earned income tax owed to the city. The remainder has been slow to flow after the Centax contract was terminated and picked up the H.A. Berkheimer Agency.


The tax tie-up affected the city's credit rating, prompted talks with the four unions about pay freezes and unpaid holidays and scuttled a plan to refinance $9.3 million in bonds.


Standard & Poor's Rating Services placed the city's "A" long-term credit rating on watch with negative implications for 90 days in August. S&P cited questionable cash flow projections from the city as a concern.


The city has a $3 million tax-anticipation note due at the end of the year, and the payments on bonds it holds could be accelerated in the event of a default.


McCormick said the city remains on the watch list as it provides periodic updates to S&P about the tax payments.


"But until we actually start to get substantial dollars back, S&P will not move off that," she said.


Once the tax revenue is deposited, the city still will need help, McLaughlin said.


"As public officials we're tasked with the responsibility of always trying to identify savings and look for new revenues and whether it is at the negotiating table with the four bargaining units requesting concessions for possible future savings that's always part of the ongoing process to improve the city's fiscal health," he said. "And it's not a direct correlation that if we get the EIT money resolved that those savings wouldn't be needed."


The $44.8 million budget for 2012 increased by approximately $1 million from the previous year. Taxes stayed the same at 96.63 mills.


Prior to Leighton taking office in 2004, the rate was 53.63 mills. He amended the budget of outgoing Mayor Tom McGroarty and raised the rate to 73.63 mills.


In 2009, the budget included a 31 percent increase in real estate taxes. There have been no increases since then.


The city's debt level reached $74.9 million early this year, and critics of the mayor said it climbed to nearly $100 million.


The debt is manageable and necessary, McCormick and McLaughlin said.


"In looking at the overall city finances every time we go to borrow we're looking at the overall picture. We're not just looking at one item and moving on it," McCormick said.


Inherited debt

A good portion of the total debt was inherited -- pension debt from 1998 and leftover debt from the previous administration.


The city borrowed between $38 million and $40 million to cover the pensions and has been paying the minimum obligation annually, they said. It began the year with a balance of $28.6 million and $27.4 million on separate pension bonds.


It's paid down most of the $10.8 million unfunded debt, owing $2.6 million at the start of the year, McCormick and McLaughlin said.


The debt taken out in the form of bonds bought by investors also has paid for capital improvements.


The city uses the revenue from parking at the Intermodal Center and rent from the Coal Street Park complex to pay off the debt, they said.


The money raised through the issuance of the bonds also is used to cover the local match required in federal and state grants secured for the projects.


"Almost every grant program, state and federal, requires you to outlay your money before you get reimbursed. You have to show that you made the payments," McCormick said.


What's next

Mayor Tom Leighton will release his 2013 budget Monday.


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