Luzerne County Councilman offers back tax cash advance to help close 2023 budget gap

Acknowledging that there are pros and cons, Luzerne County Council Vice Chairman John Lombardo wants to explore a cash advance on overdue tax receipts.

Known as “monetization,” the move could generate millions in cash to avoid a county property tax hike in 2023, Lombardo said Monday.

“I think it’s a creative way to close the budget gap this year. I don’t want to raise taxes, and I’m certainly not for the 6.75% increase that County Executive Randy Robertson has proposed,” Lombardo said.

The council would need to identify about $7.1 million in reductions or new revenue to avoid the 6.75% increase, which equates to an additional $55 per year for the average property valued at $132,776.

With monetization, the county would receive the instant cash through a loan that is then repaid using tax receipts when homeowners pay overdue taxes or bidders purchase properties through tax sales. .

Factoring in fees and costs, the lump sum payment could represent about 95% of outstanding tax liens, Lombardo said.

Analysis would be needed to determine whether county revenue would decline in future years if proceeds are pledged to the monetization loan, the administration said.

The county’s proposed 2023 budget already counts on $8.975 million in revenue from delinquent taxes.

Lombardo said he has been studying the concept for several weeks, saying monetization is currently being used successfully in several area school districts and has been rolled out by the county in the past. Wilkes-Barre has been monetizing its delinquent tax receivables for more than a decade.

On the positive side, Lombardo said there would be an immediate injection of cash to “fill the fiscal gap”.

His main concern is to depend on a one-time stream of income. County officials have worked for years to implement budgets with recurring revenue, he said.

“I think if there’s a singular year there’s a one-size-fits-all solution, it could be this one,” Lombardo said, citing rising energy costs and other inflation.

Monetization could also give the council leeway to work with the administration on addressing “structural issues” in county government that will need careful consideration, Lombardo said.

Some departments appear to be “severely underfunded and understaffed”, while other areas could have potential for streamlining, he said.

Until the council and administration find a way to correct the imbalances, the county is experiencing a “perfect storm” that is affecting the quality of some services and creating a situation where officials “keep going from crisis to crisis. “, did he declare.

Even if monetization continues, Lombardo said he will work with colleagues to find budget cuts and expects departments to “justify every dollar.”

He plans to bring up the possibility of monetization in Tuesday’s working session and schedule a more in-depth discussion and presentation in a later session if others are interested.

“I really hope it turns out to be a positive thing. If the board doesn’t like this idea or thinks it’s a wise move, it’s up to all of us to find a solution,” Lombardo said.

Robertson said he understands there are positives and negatives to monetization and asked County Budget/Finance Division Chief Brian Swetz to further explore the option and report back to the advice.

The county’s last authorized monetization was reportedly in 2013, but then-county executive Robert Lawton chose not to proceed with the budgeted cash advance of back taxes. Although his decision created a $4.3 million shortfall that year, Lawton said he didn’t want to use the one-size-fits-all solution because it came with fees and would reduce the amount the county would collect. on tax arrears in subsequent years.

Prior to the implementation of home rule in 2012, former county commissioners had steadily monetized since 2008.

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

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