Some Luzerne County Council members are leaning toward putting budget savings in a reserve instead of passing them on to taxpayers, saying the cuts they have identified wouldn’t amount to much.
To date, council has approved $294,439 in cuts to the proposed 2021 budget, including $75,000 already moved to the reserve, analysis shows.
For context, the owner of a $100,000 property would save $2 if council reduced the no-tax-hike budget by $500,000.
Councilman Walter Griffith had initially questioned the reserve approach last month when a majority supported transferring $75,000 from one cut into the reserve, saying it “kind of defeats the whole purpose” of attempting to reduce the budget.
However, Griffith announced near the 11:30 p.m. end of Tuesday’s council meeting that he now wants to place money saved from cuts in the reserve because the impact of a real estate tax cut would be miniscule. Bolstering the reserve would help the county weather any unforeseen fiscal issues in 2021 and avoid a future tax hike, Griffith said.
Council Chairman Tim McGinley agreed and said he already had been drafting a proposal to move all savings identified through budget amendments into the reserve. McGinley said he had planned to call for a vote on that proposal at council’s Dec. 15 meeting, when council expects to adopt the 2021 budget.
The county has a $472,325 budgeted reserve this year, but it had been reduced to $247,193 in next year’s proposed budget, records show. Adding in the new amendments would increase the reserve to $541,632.
McGinley said he had favored the reserve boosting because the real estate tax reduction would be insignificant and a larger reserve would help the county’s continued financial recovery. Credit rating experts recommend a 1% reserve in budgets, which would be about $1.54 million for next year’s budget, he said.
When Griffith announced his plans to support the reserve option, Councilman Robert Schnee said he was on board. Councilwoman Sheila Saidman also said she agrees with that approach.
McGinley and Griffith stressed funds in the reserve cannot be spent without council approval.
In addition to the $294,439 in cuts already identified by council, county Budget/Finance Division Head Brian Swetz announced another $150,000 in savings will be possible because the county obtained a lower interest rate for its 2021 tax revenue anticipation loan of up to $16 million.
Council approved the lowest of four bids — an offer of 0.61% from Webster Bank. The three other offers also were below 1%, officials said.
Swetz noted the county had no bidders for its loan several years ago and that county officials were later happy with a 2.5% interest rate.
Noting the county once had to “beg” lenders, county Manager C. David Pedri said the receipt of four proposals under 1% is a sign the county’s fiscal initiatives are coming to fruition.
The proposed $154.65 million general fund operating budget would keep taxes at 6.1696 mills, which equates to a payment of $616.96 on a $100,000 property.