Proposed Luzerne County budget includes 5% tax hike

Oct. 16--Luzerne County Manager C. David Pedri has proposed a 5 percent county tax hike in 2020, which would equate to about $30 more in real estate taxes annually on a property assessed at $100,000.

The total county tax bill for a $100,000 property would rise from $597.54 to $627.42 if council opts to include this increase in the budget it adopts Dec. 10.

County taxes are currently 5.9754 mills. Under Pedri's proposal, another 0.29877 mills would be added, bringing the total to 6.27417. A mill is $1 tax for every $1,000 in assessed value.

A 5 percent hike would bring in an additional $5.25 million annually.

Currently $137.8, the general fund operating budget would increase to $153.49 million under the proposal, which has been posted under the budget/finance section at www.luzernecounty.org.

"I am not happy about having to recommend a tax increase," Pedri said during Tuesday's budget unveiling at the courthouse, noting he also is a taxpayer and father of three. "I know exactly what it means to raise taxes, and we don't do things lightly here."

But Pedri said his duty isn't to "be popular."

"My job is to present a balanced and stable county budget to Luzerne County Council, which I believe I have done."

The administration will present requests line by line, he said, describing the proposed budget introduction as a "beginning point of this marathon."

"I fully anticipate that we will come to a reasonable conclusion as we have done in the past," he said.

Council has scheduled nine work sessions to review proposed spending and receipts before its Dec. 10 budget adoption. A council majority avoided proposed tax hikes for 2018 and 2019 largely with a combination of cuts and the use of one-time revenue windfalls.

Pedri told council Tuesday no significant one-time receipts are expected in 2020.

Rising expenses

A tax hike is largely needed to cover the following increases totaling $4.8 million, Pedri said:

--$1.5 million for the employee pension fund subsidy, which brings the total payment to $14.5 million.

--$2.2 million for health insurance, which includes making up for $1.6 million that had been covered by one-time revenue no longer available next year. The 2020 health insurance budget total: $20.75 million.

--$300,000 for a new contract for county prison inmate health care services.

The county currently pays Wellpath LLC $197,688 per month, or around $2.37 million annually, to provide a range of health care services and personnel.

--$600,000 for county Children and Youth needed to obtain a $2.4 million funding match.

--$62,000 for the Luzerne County Community College, which is a 1 percent funding increase. Pedri said the college had requested a higher 3 percent and has not received a county subsidy increase in more than a decade.

--$200,000 for debt repayments that now total $25.2 million.

Councilwoman Linda McClosky Houck pointed out the newly approved borrowing/refinancing package was projected to lower the 2020 payment to $24.4 million. County Budget/Finance Division Head Brian Swetz said the lower amount can't be locked in until the package is cleared by the state, and the administration will alert council if further reduction is possible.

Personnel

The proposed budget also would absorb $489,686 in union-negotiated raises and 2 percent, merit-based raises for non-union employees, Pedri said.

He earmarked $111,450 for non-union raises in the departments under his control and the following amounts for increases in other offices: controller, $2,680; district attorney, $9,785; and judiciary, $112,841.

The manager proposes adding three positions, which would bring the total staff count to 1,565.

One of the suggested additions is a building and grounds custodial worker at a $21,550 salary. Some council members recently questioned the administration's decision to contract out cleaning of the new record storage facility in Hanover Township. This worker would handle that building and also fill in at other locations as needed, Pedri said.

The other two new positions would be a network analyst and security analyst, each paying $50,000, in the information technology department.

The county IT department now has nine positions, including three funded by the court, officials have said. A Memorial Day weekend cyber attack illustrated the need for additional technology help, Pedri told council.

Pedri noted 12 positions were added in 2019, while nine were eliminated. All new positions had been primarily or entirely funded by grants or other outside government funds, he said.

Revenue

In addition to $5.25 million from the tax increase, the proposed budget includes higher receipts from the following:

--$715,000 in real estate assessment growth.

--$25,000 for payments in lieu of taxes.

--$250,000 from expired tax breaks.

--$100,000 in missed property added to the rolls from an aerial flyover software program.

--$490,000 from grants and expense reimbursement in the district attorney and planning/zoning offices.

--$140,000 from short-term investing of funds set aside for later expenses.

Much of the overall budget increase stems from the new inclusion of $8.5 million in employee payments toward health insurance, Pedri said. The county has been receiving the money but will now record it through the budget at the recommendation of auditors, he said.

The last county tax hike -- 4% -- was approved in 2016 for the following year's budget.

The 2017 hike was the third tax increase since the county's 2012 switch to a home rule government.

The first was a 2-percent hike in 2012 -- part of a package that also included approximately 60 layoffs and the tapping of $1.4 million in past-borrowed funds to help repay debt. That amended budget replaced a version inherited by prior commissioners that contained unattainable revenue, required 140 layoffs and would have prompted litigation from court branches over deep cuts, the administration said at the time.

An 8-percent tax increase in 2014 -- the maximum hike permitted by home rule -- was blamed heavily on debt repayments from past borrowing and needed to avoid a projected 194 layoffs, officials had said.

Council also stopped offering a homestead tax break for owner-occupied residences in 2015. The break, which cost the county about $4.7 million, had saved participants $45 to $57 on their county real estate taxes annually.

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.

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