Sunday, July 13, 2014

Tax revenue due just half of W-B deficit

February 17. 2013 9:51AM
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WILKES-BARRE – The estimated $1.2 million in earned income tax revenue due the city is only half of its revenue shortfall problem.

The city is coming up short in roughly the same amount of other taxes, creating a deficit of between $2 million and $2.5 million for this year, said Drew McLaughlin, assistant to Mayor Tom Leighton.

"It's hard to peg more than an estimated number," McLaughlin said Friday, a day after the mayor warned of severe cuts in departments if employees don't respond to his request for help through voluntary six-week furloughs.

"Right now we're erring on the side of caution," McLaughlin said.

The city is scrambling to find ways to address the shortfalls partly due to the economy and a malfunction in the collection of the EIT by Centax/Don Wilkinson Agency. The company formerly handled the job for all municipalities in Luzerne County before its contract was terminated in August and taken over by another firm.

But the city can't borrow any more in the short-term because of a possible downgrade of its "A" long-term credit rating due to the Centax issue.

In August, Standard & Poor's Rating Services placed the city rating on a watch with negative implications for 90 days.

The city's nearly 300 employees have until the end of the month to respond to the mayor's request. They would continue to be covered by their health insurance from the start of furlough on Nov. 18 through the end of the year.

"More than a dozen employees have contacted (the Human Resources Office) to discuss what it means to them," McLaughlin said.

He acknowledged he too is considering it.

By year's end the city has hefty payments due, including $2.29 million on a bond issued for the construction of the Intermodal Center and a $4.1 million tax anticipation note to be paid back by tax revenue collected throughout the year.

The TAN initially was due at the end of the month, but was pushed back to Dec. 31 because of the city's financial crunch. McLaughlin said the TAN "will be met."

The TAN carries the city through the beginning of the year, he explained. As the rest of the taxes come in throughout the year, the city pays its bills.

The property taxes arrive between April and the summer, and the EIT typically provides needed money in the third and fourth quarters, McLaughlin added.

This year, the city budgeted $8 million in property taxes, $11.1 million in earned income taxes, $560,000 in professional business tax, $1.37 million in mercantile business tax and $1.4 million in real estate transfer tax.

But the economy and struggling housing market are affecting the real estate transfer tax. House values have depreciated and those for sale are on the market for a longer time, McLaughlin said.

There are signs of improvement in other larger markets across the country. However, Northeastern Pennsylvania lags behind national trends by a few years, he said.


Wilkes-Barre Mayor Tom Leighton will present his 2013 budget at 3:15 p.m. Monday in council chambers on the fourth floor of City Hall. The city's charter requires him to present the spending plan by Oct. 15. The public is invited to attend.

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