Luzerne County Council members are set to vote on their first 2023 budget alterations Tuesday, which is the last scheduled meeting before the Dec. 13 budget adoption.
Council would have to identify approximately $7.1 million in cuts or new revenue to avoid a proposed 6.75% real estate tax increase, which equates to $55 more annually for the average property assessed at $132,776.
As previously reported, county Acting Manager Brian Swetz has proposed budget alterations that would reduce the tax increase to 5.5%, cutting the increase from $55 to $45 on a $132,776 property.
His alterations, which are up for adoption Tuesday, include lowering allocations for non-union merit raises, postage, the reserve fund, tax assessment appeal refunds and other budget lines and eliminating planned studies on employee compensation and options for the aging prison system.
Swetz also proposed a $150,000 reduction for prison system food expenses due to a new kitchen management contract with Oldsmar, Florida-based Trinity Services Group Inc. That contract is up for council discussion during Tuesday’s work session, which follows the voting meeting.
Monetization
Another budget-related option on Tuesday’s agenda is a cash advance on delinquent real estate taxes — a practice known as monetization.
The county’s proposed 2023 budget already counts on bringing in $8.975 million from delinquent taxes — a figure tax claim and budget/finance say is based on past receipts.
Jim Geronimo, a representative of Municipal Revenue Services, which handles monetization transactions, told council in early November it would receive a little over $10 million in 2023. However, he immediately pointed out that $10 million includes the amount the county already had budgeted.
That indicates the county could receive $1.05 million extra by monetizing, using the payment estimate in the meeting agenda paperwork — $10,025,290.06 — and the amount the county already budgeted.
Councilman Tim McGinley, who has strong reservations about monetizing, said he will seek more clarification before council votes Tuesday because Geronimo had presented a different figure on what the county had budgeted during his presentation to council.
Geronimo told council the county has budgeted between $6.6 million and $7 million, which left the impression the county would be gaining more than $3 million by monetizing.
Clarity on the figures also is warranted, McGinley said, because Geronimo had stated the county could expect to continue receiving around its “current budgeted amount” each year if it continues to sell its back liens annually. Council members must be clear on whether he is referring to the figures he presented or the one in the budget, McGinley said.
Municipal Revenue Services’ agenda submission contained a highlighted notation stressing its estimate of the results is “subject to change depending on the results of collection receipts, which directly impact the advance percentage.”
During the November presentation, McGinley said the county is “locked in” to continue monetizing once it starts.
“Sure you’re locked in if you want to be locked in. If you don’t want to be locked in and you want to walk away, we’ll structure you out so you don’t end up with a hole in your budget, because at that point we will own all the liens,” Geronimo had replied. “That’s something we’re upfront about.”
Former county councilwoman Linda McClosky Houck had submitted a public comment urging council to reject monetization, describing it as the government equivalent of a payday loan that “individuals with poor financial management skills turn to for an immediate but short-sighted quick fix to instant problems.”
McClosky Houck said monetization was “one of the first practices to be eliminated” after the 2012 switch to a home rule government structure.
Geronimo had taken issue with the payday loan description, saying monetization is a “legitimate financing structure” to access a “dormant asset,” referring to tax liens.
County Council Vice Chairman John Lombardo said he had suggested consideration of monetization because he does not want to raise taxes, acknowledging there are different opinions about “whether or not it is a good step to take.”
“My idea behind this was just thinking outside the box to put money in the revenue column this year to not raise taxes,” Lombardo told his colleagues during the November discussion.
Administration feedback
Swetz weighed in on monetization in an email to council members Friday evening, reiterating he is still against monetization as he was in his prior role as budget/finance division head.
“This is not a dig in any way on Municipal Revenue Services, who handled the last monetization. This is a comment against the process,” Swetz said.
Swetz agreed some school districts use monetization as a tool, but he argued school districts also have regular tax increases.
“I don’t see this as good business sense to avoid a potential tax increase,” Swetz said.
The last county tax increase was 3.25% in 2020. That was the only increase over a five-year period, from 2018 through 2022, he said.
The county has implemented five union contracts with average 3% increases and boosts in most starting salaries “to try to stay competitive,” Swetz said in his communication.
“How are these paid without a tax increase?” Swetz wrote. “The best analogy I could come up with is consistent tax increases are like car maintenance. No one wants to do it, but you also don’t want a large repair bill in the future.”
Swetz said he heard comments that it is not the right time for a tax increase in this economy, but he said a “right time never exists.”
”This is transparency, and council members are free to disagree with me on this and other issues, but I felt compelled to weigh in on this monumental decision,” Swetz wrote.
More amendments
This is the first county budget for six of the 11 county council members: Carl Bienias III, Kevin Lescavage, Lombardo, Matthew Mitchell, Brian Thornton and Gregory Wolovich Jr.
Bienias proposed a series of cuts in nine departments, stressing he is open to discussion but determined to make progress in whittling down the budget. He said some of the line items he is proposing to cut are one-time expenses that may be covered by other funding streams outside the general fund operating budget.
After taking out one suggested reduction that was already in those proposed by Swetz, the package presented by Bienias would trim approximately $1.038 million.
The cuts are in the budgets for county council, the county manager, building/grounds, planning/zoning, roads/bridges and the district attorney’s, solicitor’s, sheriff’s and coroner’s offices.
Additional budget cuts proposed by other council members may be publicly posted to council’s agenda on Monday.
Tuesday’s meeting starts at 6 p.m. in the county courthouse on River Street in Wilkes-Barre, with instructions for remote attendance posted under council’s online meetings link at luzernecounty.org.