Lackawanna County Commissioners table vote on tax hike

Jan. 23--SCRANTON -- Lackawanna County property owners will have to wait another week to learn if their county real estate taxes will rise 11.3% this year.

Commissioners voted unanimously Wednesday to table a proposed budget ordinance hiking 2020 county taxes by 6.5 mills. A mill is a $1 tax on every $1,000 of assessed value. At the new rate of 63.92 mills, the annual county tax bill for a typical single-family home assessed at $12,000 will increase by about $78.

The county would use the new tax revenue to close a roughly $5.8 million operating deficit in the 2020 budget and make a roughly $3.87 million employee pension fund contribution -- the annual required contribution as determined by an actuary.

Commissioner Jerry Notarianni, who believes the hike is necessary to right the county's financial ship after years of irresponsible decision making, motioned to adopt the amended budget complete with the tax increase. When neither Commissioner Debi Domenick nor Commissioner Chris Chermak offered to second the motion, Chermak motioned to table the matter for a week pending further study. Domenick agreed and all three commissioners voted to table the ordinance.

The vote followed a presentation by county Chief Financial Officer Tom Durkin, who said failure to fund pensions and bolster a dwindling general fund surplus could jeopardize the county's investment-grade bond rating moving forward.

The county maintained a $27.6 million general surplus at the end of 2018.

If the county doesn't raise taxes in 2020, Durkin estimates that surplus will shrink by about $17.24 million by the end of this year. That includes about $5 million the county will draw from its general fund to cover cost overruns for the project to convert the former Globe store into the county government center, as well as the cost of plugging 2019 and 2020 operating deficits and making a full 2020 pension contribution.

If commissioners reject the tax hike, the county will end 2020 with a $10.35 million general fund surplus, based on Durkin's estimate. Standard & Poor's, a credit rating agency, recommends the county maintain a general fund surplus of 10% of its current budget, or about $12.98 million.

The agency could downgrade the county's A-stable bond rating if officials continue to draw down the surplus to close annual operating deficits, make insufficient pension payments or otherwise weaken the county's financial footing, Durkin said. A downgraded credit rating would likely mean higher interest rates on future debt refinancing and make bond insurance "considerably more expensive," he said.

Notarianni has repeatedly accused former commissioners Patrick O'Malley and Laureen Cummings of neglecting the pension fund while misrepresenting the county's financial health over the past four years. The county has regularly failed to make the full annual pension contribution recommended by its actuary, last doing so in 2006.

Officials made no pension fund contribution in 2007, 2008, 2009, 2011, 2017 and 2018, Durkin told The Times-Tribune last week.

"The pension (fund) is distressed," Durkin said Wednesday, noting it was about 70.8% funded as of the beginning of 2019. "We need to start shoring up our pension plan so that it doesn't go further south. It's been declining every year since 2012, I believe."

Despite the pension situation, Madison Twp. resident Ralph Antidormi asked commissioners to consider the taxpayers who would bear the burden of the hike.

"I don't have a pension," Antidormi said. "How about giving me a break?"

Commissioners will continue the meeting at 10 a.m. Wednesday in the fifth-floor conference room at the former Globe store, 123 Wyoming Ave. A vote on the budget and tax hike is expected that day.

Domenick said she wants to speak with pension experts in the coming days, hopefully in person, to gather more information. She also expressed concern about the size of the proposed tax hike, noting an 11.3% increase would be especially burdensome for Scranton taxpayers already dealing with rising school and city property taxes this year.

Chermak said he needs more time to study the issue.

"I'm not going to approve an increase without the facts, and I just (haven't had) enough time to make that decision," he said.

Durkin fears the extra week may delay or otherwise impact the generation of 2020 property tax bills. Efforts to reach Scranton Tax Collector Bill Fox, who oversees the Single Tax Office that generates the bills, were unsuccessful.

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