budget of choices," it ignited a firestorm of protest. "John, that budget stunk!" exploded then Council Prez Ron Angle, who exploded during a Council meeting. His behavior earned him an Express Times Turkey. Stoffa got a "big, meaty drumstick" for a budget that left all the tough choices to County Council, or more specifically, Angle.
In Stoffa's 2012 budget, proposed on October 1, he makes all the tough choices himself. He's both proposing a 9.3% tax hike and is also reducing the County's "Financial Stabilization Fund," i.e. two months of the general fund, from $25 million to $20 million. More importantly, he's drastically reducing the unassigned fund balance, i.e rainy day fund, from its current $16 million level to just $2.4 million, about half of what should be there under governmental accounting guidelines adopted by Council in December 2010.
According to Acting Fiscal Affairs Director Doran Hamman, this reduction could have a negative impact on the County's bond rating.
It's the worst of both worlds.
In a word, Gracedale. Stoffa explains that himself in the opening line of his budget message (located here on the County webpage). "Decisions that occurred in 2011 will have a serious consequence on the 2012 proposed County budget. In particular, the decision by the voters in the May referendum to retain Gracedale will prompt necessary capital repairs at the facility along with a County contribution of $7.2 million to balance the Gracedale budget ... the equivalent of a mill of tax ($7.4 million). Had the facility been sold as anticipated, a $35 million revenue source would have occurred and the necessary $20 million in identified capital expenditures would have been avoided. Nevertheless, the voters have spoken."
While the County's 2012 Budget is impacted by numerous other factors, from the swaption to rising personnel costs, there is no question that the County's retention of its aging nursing home is the seminal reason for the proposed tax hike and dangerous dip into the general fund. Had Gracedale been sold, the issue being debated right now would be how much money to return to taxpayers.
In addition to the $7.2 million needed at Gracedale next year, another $2.4 million is still needed for this year. Hamman stated that a budget amendment for this money will be sought in December.
Stoffa stated that he'd be seeking a tax increase of 20% were it not for the Guaranteed Energy Savings Agreement approved by Council last month. That will enable the completion of 21 projects at the nursing home next year. But the $13 million in costs will be financed from utility cost savings that are guaranteed by McClure Company, a subsidiary of PPL.
"I'm not blaming Gracedale necessarily for the tax increase," stated Stoffa at a news conference in which the budget was released on Friday. "But the fact that we have to $7.2 million into Gracedale is the equivalent of one mill."
After Gracedale, the next biggest bogeyman facing Northampton County is former Executive Glenn Reibman's folly - the 2004 swaption. I'll tell you about how that impacts the budget in the post below.