Northampton County Executive John Brown thinks he can make it through next year without a tax hike. He released his Budget Message for next year during a news conference this morning at the Centralized Human Services Building. The Budget itself will be released tomorrow and posted on the Northampton County web page.
Next year, Brown is projecting $279.5 million in total revenue. That's a $9.4 million drop from this year, and is due primarily to cuts in Human Services grant funding, as well as a stagnant real estate market.
He's proposing a $334.4 million budget, a $16.2 million cut from this year. He asked department heads to come ip with 10% in cuts, and was able to realize 6% ($3.5 million). In his budget message, he states that "[o]ur employees aree the most valuable assetsd we have." But he stated yesterday that there will be no wage increases other than those already contained in previously approved union contracts. He has also reduced the County's contribution to health care for its 2,200-person workforce, although he was unable immediately to quantify the savings achieved.
His proposed budget includes only "minimal" capital improvements, although the County will continue on the work started with a 2013 bond issue for bridge reconstruction and rehabilitation, replacement of generators at the Courthouse and Gracedale, and a boiler house for Gracedale.
The County contribution to Gracedale next year is projected at $7.7 million.
The most interesting feature of his budget message is a proposed $20 million line of credit. He downplayed that in his news conference, calling it a "back up plan". His budget message states it will be used only if revenue is insuffucuent "to support operating expenditure requirements." But it also states, "a Line of Credit is proposed to balance the budget."
Northampton County's Home Rule Chater expressly prohibits any form of borrowing "to finance annual operating programs or services", with the exception of emergency borrowing. The Home Rule Charter also expressly requires a balanced budget. It states, "The total of proposed expenditures shall not exceed the total of anticipated funds available."
Brown was asked repeatedly whether this line of credit violates the Home Rule Charter requirement of a balanced budget, and he stated he would have to research that question.
It appears that it might also be illegal to seek a line of credit for operating expenses except for an emergency appropriation that would rerquire the assent of County Council.
34 comments:
Illegal to have a line of Credit for a Government
See you tonight John...can't wait...Bernie...After tonight I will no longer be anonymous...looking forward to it!
Isn't that the Federal Reserve for US? But you may be right. Local governments may be prohibited from balancing their budgets with a commercial line of credit. Bernie, is this a HRC issue?
I questioned Brown about this. He does not know. It strikes me as illegal. I am looking into it.
Perhaps Bernie meant to say that the Reserve Fund would be $20 million.
who cares as long as he continues to stick it to the unions
No increase in wages will impact 100% of the non-union workers. Union workers that already have a contract won't be impacted as they will get the contractual increase. And those union workers that don't have a contract but are eligible for binding arbitration will almost certainly get some sort of increase.
stick it to the unions???? Haven't had a raise in 3 years!!!!!!!!
Perhaps the Union Workers should consider themselves fortunate just to have a job.
Many, many, many Americans do not have a job.
Proper perspective can do wonders.
What a pathetic budget address. Brown doesn't even know if balancing the budget with a line of credit is legal??? Why wasn't this thoroughly researched by his solicitor's office before announcing it to the public? It is bad enough that Brown needs Kim Pyler to change his diapers at press conference. Now, his top advisers including his solicitor and finance director cannot prepare him with an accurate legal interpretation of his budget initiatives? The clown car is filling up!
" ... with the exception of emergency borrowing."
It reads like he will only use the LOC in a cash flow emergency. The HRC can be read a couple of ways, depending on who gets to declare an emergency.
No raises is tough to take. I've been enduring it for five years and it hurts. Glad to be working though. No tax increase is a Godsend. Sal Panto should take note.
"Illegal to have a line of Credit for a Government"
No, it can be done legally. BT has a line of credit for dcapital expenses. Bethlehem perioodically gets a line of credit for its non-utility capital expenditures. What is illegal is borrowing money or a line of credit for normal operating expenses, unless there is an emergency. This must also be approved by Council. There is no emergency. So this line of credit as proposed by Brown certainly appaears to be illegal.
"The HRC can be read a couple of ways, depending on who gets to declare an emergency"
Not really true. You can't borrow money for normal operating expenses. Period. If there is an emergency affecting life, health, property or the public peace, COUNCIL has the authority to declare an emergency and borrow money, not the Exec. Plus, the money has to be repaid very quickly.
Just raise taxes 2 mils and be done with this stupid idea of never raising taxes, ever
Its not the best way to do business, but many municipal governments use tax anticipation notes to make it through the year. Stoffa was right about Gracedale. The county contribution continues to rise.
It is copntrary to the HRC unless the result of an emergency and approved by Council.
local governments can use tax anticipation notes. Normally a government would get an amount approved to reflect the greatest need based on formulas that are established by state law. Unfortunately, this approved amount is being referred to as a line of credit so that simpletons can understand its use. I would suggest that Brown just use the term tax anticipation note and we don't have to hear all of these wannabe bankers telling us that a line of credit is illegal
A Tax Anticipation Note is illegal under the HRC, which clearly requires that there must be no expenditures in excess of anticipated revenue.
If there is delay in getting that revenue in, and it rises to the level of an emergency, County Council can authorize a short-term loan, which must be paid back by the end of the next fiscal year.
The $20 million LOC proposed by Brown is hardly an emergency. His Budget Message clearly states it will be there to balance the budget and to replace the reserve fund that should be there. It is actually being built into his budget bc he obviously realizes there will be a shortfall.
The proper and legal thing to do is increase the revenue, not with a LOC, but a tax hike.
This is an irresponsible and illegal budget.
Who told you that?
Judge Braxton and the Lackawanna judiciary.
Laws governing municipal debt cannot be altered by home rule charters.
TANS and TRANS are allowable.
Ask Judge Braxton.
Municipal borrowing is not a topic that is pre-empted by state law. The Home Rule Charter applies, not your kookly notion that an undefined $20.1 Million line of credit with no interest rate and no bank is somehow standard practice in Northampton County finance. It's illegal.
Municipal borrowing is governed by the state legislature so says the constitution. The procedures for borrowing can be changed or altered by home rule charter, but the ability to borrow cannot. Tax and Revenue Anticipation notes have to follow exact procedures stated within the unit debt act. There is no such thing as a line of credit. One can only borrow once to a maximum predefined level established by a projected shortfall of revenues against expenditures. The actual take down may occur over time, but once the funds are taken and repaid, they cannot be taken again. That is the line that Brown is incorrectly referencing. All TRANS require legislative consent.
"Stoffa was right about Gracedale"
No he wasn't. He spent all the surplus like a drunken sailor. he slashed Gracedale employees pay and benefits, while giving lavish increase to his cabinet and other unions. He got us into this mess. Brown is trying to right the ship.
I see.i think the unions might have a different opinion about those lavish increases. Especially the Gracedale unions that gave back $2.5 million.
Gracedale was forced to five back millions. At the same time other unions like PSSU and some got fat, in some cases double digit, increase. Also cabinet members got a raise every year. No sacrifice there.
'he slashed Gracedale employees pay and benefits"
No he did not AFSCME Gracedale contracts came with raises every year. The only thing "slashed" was overtime calculations.
"Gracedale was forced to give back millions."
Wrong. Millions were spent on capital improvements. And it's still on pace for a $9 million deficit this year. More cuts have to be made, time to privatize laundry, dietary, and housekeeping.
nice anon 5:05.
Keep spreading the lie. he may be gone but the spirit lives on.
I believe that the County Executive needs to raise taxes equal to the amount that Gracedale’s budget is supplemented by the County’s contribution. After all, the taxpayers voted to “Save Gracedale,” therefore they need to pay for their decision. Seems only fair.
There is no getting around a tax increase.
If you can't be civil to my readers, don't post here, Mezzacuckoo. Do it on your own blog, where you can talk to yourself all night.
I find it sickening that citizens don't support the employees taht provide services to them. What has happened to America? What has happened to this great country in which a person can raise a family and be proud of their job? Sure, most of the negative commments here come from people who are jealous or have some sort of axe to grind. But, it seems as if those who are against the workers of the County and just not appreciative of the services they provide. Its a sad day in america.
$20 million line of credit?
Interesting. I am looking at a couple of John Brown’s campaign fliers.
This one has a “Certificate of Hypocrisy” for John Callahan, as “the truth is that he ADDED more debt” (flier’s emphasis, not mine).
Then we are told: “Bottom line: if we don’t have it, we shouldn’t spend it. It’s that simple. Recklessly spending against our children’s future is wrong, and Brown will oppose any attempts to do so.” ... One can’t spend against the “children” like borrowing $20 million to pay the bills.
On the other flier, we are told of his “30 years of experience leading multiple corporate enterprises…(and) now plans to bring his business acumen and leadership experience to work …. He CUT taxes, balance the budget…”
Who deserves a “certificate of hypocrisy”??
Personally, I tend to agree with earlier comments of Bernie that NorCo should bite the bullet and implement a small tax increase.
4:22 you are an idiot. The Home Rule Charter dictates how much money can be borrowed in Northampton County not the State Legislature. County Council is the body that has to raise the taxes to pay the bills and that includes the interest on any bonds or loans. The Executive cannot borrow money without the say so of the County Council and the law of Northampton County states that the Executive must have a balanced budget. The legislature sets guidelines the County dictates policy.
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