Luzerne County Council is poised to adopt a proposed 2013 general fund budget containing a $4.3 million void with no definitive plans on how to fill it, officials say.
The proposed $122.25 million spending plan, which keeps the real estate tax rate at 5.32 mills, counts on $12.3 million from back taxes.
The county's outside tax claim operator says he can commit only to about $8 million based on historical performance.
The $12.3 million would be realized only if all defaulters pay up, which is unrealistic, said John Rodgers, of Northeast Revenue Service LLC, which has been handling county tax claim since 2010.
Some of these property owners won't pay, and their properties can't go to auction unless taxes are delinquent for two years, he said. Rodgers said his company pushes to get all eligible properties to auction, but some sales are delayed due to bankruptcies, court orders and other legal hurdles.
It's the county's prerogative to budget how it wants, but I just want to make sure nobody expects us to bring in more than $8 million, Rodgers said.
County Interim Budget/Finance Chief Vic Mazziotti doesn't dispute Rodgers' points.
Mazziotti said the remaining $4.3 million may have to be obtained through monetization, which is essentially a cash advance on delinquent taxes.
However, a majority of council members rejected this past-used option when they revised the 2012 budget because of added fees and a desire to wean off one-time fixes.
Mazziotti also said the administration aims to spend less than budgeted and seek unanticipated revenue.
If it turns out that we are under-spending or revenue is exceeding estimates, it may not be prudent or necessary to monetize. Council can make that decision, Mazziotti said.
County council members made it clear Tuesday they expect further cuts in 2013 that weren't factored in the budget, such as savings on cellphones, mileage reimbursement and county-owned vehicles.
Another example: Councilman Eugene Kelleher questioned the need for three budgeted voting-machine technicians, at a combined cost of $139,479 with salaries and benefits, in addition to five inspectors.
When the election's not there, what do they do? he asked.
County Manager Robert Lawton said machine technicians were for lack of a better word, an artifact, from the days when the county had lever voting machines that required specialized maintenance. The electronic voting machines require less maintenance, and some of that support is provided by the machine supplier, he said.
The county's new election director, Marisa Crispell-Barber, is developing a staff reorganization plan that likely will result in savings, Lawton said.
Citizen Mike Giamber challenged council Tuesday on its willingness to proceed with an unknown factor in the budget.
I sure wouldn't be able to do that unless somebody tells me are we going to borrow money next year against delinquent taxes or are we not? he said, describing the current budget version as soft.
Giamber said the strategy reminds him of the prior county administration's controversial decision to include $4.4 million in revenue from the sale of the former Valley Crest Nursing Home property in the 2011 budget. Commissioners ended up monetizing taxes because the sale didn't materialize.
Councilman Stephen A. Urban also criticized the proposed budget's inclusion of tax claim revenue that he does not believe is real or attainable and pointed out most of his council colleagues rejected monetization in the past.
With monetization, the county must turn over future back-tax revenue collections to repay a loan needed to provide the up-front cash. In addition to the loan interest, the county must pay fees for loan oversight.
Rodgers said the outstanding loan for past monetization will be paid off the end of this year, which means all back taxes collected after that will go directly to county coffers.
Northeast Revenue collected around $8 million this year, but roughly $2 million was diverted to repay the monetization loan.
If the county is going to monetize, he agrees with the administration's suggestion to wait until later in the year to reduce fee payments and other losses.
The 2012 budget counted on $7.3 million from back taxes. Rodgers said he doesn't expect to receive much more than the $6 million forwarded to the county to date because of the $2 million in past monetization payments.
Luzerne County Council will meet at 7:30 p.m. Monday in the
second-floor jury room at the courthouse in Wilkes-Barre to vote on the proposed 2013 budget.
Budget amendments adopted Tuesday have been posted on
the county website,