WILKES-BARRE – The city Friday put off its decision on furloughs and instead sweetened the deal for eligible retirees in an effort to reduce payroll expenses to make up for an estimated $2 million revenue shortfall this year and lower the proposed 30-mill property tax increase next year.
The 51 employees eligible for retirement can choose between a $400 monthly stipend from Jan. 1, 2013 to December 2015 or health care coverage for their spouses and dependents for the same time period.
Depending upon the response by Tuesday, the city will decide on the number of furloughs necessary until year's end and layoffs next year.
Mayor Tom Leighton warned of both as the city struggles to adhere to its $44.8 million balanced budget for this year and council reviews his preliminary $45.8 million budget for 2013.
Lower than budgeted revenues and late receipt of earned income taxes due the mess created by the collection firm Centax/Don Wilkinson Agency caused the shortfall, prompting the mayor to ask for voluntary furloughs and offer those who agreed continued health care coverage and rehiring at the start of the New Year.
He also proposed a 31-percent tax increase next year, but would prefer to reduce the hike with concessions from the mostly unionized 300-member workforce rather than layoffs.
In a press release, the mayor said the extended healthcare coverage was not enticing enough because some of the employees do not have dependents or those dependents have coverage through their jobs. Employees upon retirement receive coverage for themselves.
The administration has reviewed this for several weeks and we believe that the best option to improve city finances is through retirements in an attempt to minimize potential cuts across city departments, Leighton said.
Administrative Coordinator Drew McLaughlin declined to say how many employees responded to the initial incentive and request by the mayor for voluntary furloughs.
He also said he was uncertain how many of the retired positions would be filled. Some positions are mandated in the city charter and others have to be maintained to comply with collective bargaining agreements.
McLaughlin acknowledged employees responded and some asked is there any chance of another financial incentive?
The administration looked closely at the matter and came up with an offer that is fair and beneficial to the city, McLaughlin said.
The goal is to maximize savings in the payrolls for this year and next year through natural retirements instead of cutting employees on the lower end of the pay scale, he explained.
The savings could trim the tax hike as well. A mill equals approximately $80,000 and the proposed increase of 30 mills would push the rate to 126.63 mills.
There is a domino effect as to how this will play out, McLaughlin said.
The alternative incentive was offered to employees on Thursday afternoon, giving them the weekend and federal holiday Monday to consider it. The date of retirement was pushed back to Nov. 21 from Nov. 15 after the alternative was put on the table.
Employees shouldn't expect to hear any more, said McLaughlin.
This is the last retirement incentive the mayor and administration are prepared to put out, he said.