Luzerne County’s administration is working on a plan to avoid another crisis if state officials again fail to pass a budget by June 30, officials said.
In response to last year’s state budget impasse, a council majority was forced to obtain an emergency $20 million loan to avoid a county government shutdown and defaulting on an annual required debt repayment.
“I will say this now, and I will say it again, we are not going to be in that position again,” county Manager C. David Pedri recently told the county council.
All county services were in jeopardy last year because the administration kept fronting money to keep human service agencies operating as it waited for overdue state reimbursements, Pedri said. By the time the administration presented the proposed $20 million borrowing to council, the county had no other means to cover payroll and other pressing expenses outside human services.
Pedri said he implemented new protocol when he took over as acting manager in January, requiring human services to reimburse the county for their payroll within five business days after these employees are paid.
Even in years when there was no state budget impasse, the administration waited a month or two for human service departments to turn over state reimbursement, Pedri said.
“We can’t extend this money. We don’t have the reserve to do that, so we have to make the tough decisions now,” Pedri said.
The administration also has been developing a plan to gradually “step down” human services if state funding is cut off, leaving only state-mandated services, Pedri said.
For example, counties must provide protective services for endangered children and the elderly, but they are not required to operate active adult centers for seniors.
Pedri said he will present this plan to the council in late June or early July.
Councilman Harry Haas said the plan should be finalized by the end of June because he wants to “hit the ground running” with immediate cessation of services July 1.
“I think it’s almost a foregone conclusion there’s going to be an impasse,” he said.
Haas had refused to support last year’s county emergency borrowing to send a message of displeasure to state leaders. He proposed the county consider withholding fees and other revenue due to the state if there’s another impasse to encourage them to act.
“This is all going to roll downhill. It’s going to escape the politicians in Harrisburg,” he said, referring to the ramifications of a budget impasse. “It’s going to affect this council, and we’re going to be forced to act, and it’s inherently unfair.”
A proposed line of credit also will be part of the administration’s proposed plan to the council, Pedri said.
Pedri said no money could be borrowed from the credit line without the council’s approval. He wants to have a revenue source in place because last year’s borrowing was “extremely time-consuming” and “tenuous,” with the financing secured “just under the wire,” he said.
Councilwoman Kathy Dobash said she’s “leery” of resorting to a line of credit without exhausting other cost-savings ideas, such as a reduced work week.
Pedri said he is considering all options and isn’t treating a line of credit as the “end-all, be-all.”
He did not advocate cutting human service branches in anticipation of an impasse because these branches don’t significantly impact the county’s general fund operating budget when state funding is flowing, he said.
The county match is 20 percent for Children and Youth and 8 percent for Mental Health/Developmental Services, he said. No county funding is required for Aging, he said.
Pedri said he’s working with the County Commissioners Association of Pennsylvania to stay on top of options deployed in other counties. Some counties are not as vulnerable because they have reserves to tap in emergencies, he said. In comparison, Luzerne County has a deficit and may not get out of the red for years.
According to the association, the average county had to come up with $12 million to keep human services departments operating during last year’s state budget impasse.
Seventy percent of the 67 counties drew down on their reserves, while the remaining 30 percent borrowed funds, the association said.
Some other association statistics: 48 percent delayed payments to providers and vendors; 32 percent made staff changes such as hiring and training program freezes; and 22 percent reduced services.
Luzerne County paid $46,185 in interest on its $20 million emergency loan, which was repaid in January after the state started releasing funding owed to counties. The county is attempting to recoup some of the interest from the state, Pedri said Friday.