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Nazareth, Pa., United States

Friday, November 06, 2015

NorCo Council Approves $50 Million Emergency Loan For Human Services

Budget Administrator Doran Hamann and
Fiscal Director Jim Hunter
As a result of a record state budget impasse, Northampton County has been paying human services providers out of its own pocket, but its running out of money fast. Last night, Council adopted an emergency ordinance by a 6 to 3 vote that will enable the County to borrow up to $50 million to cover human services costs through march of next year.

Under the County's Home Rule Charter, Council has the power to adopt an ordinance the night it is introduced "[t]o meet a public emergency affecting life, health, property or the public peace."  But a super majority of six votes are needed.

Fiscal Affairs Director Jim Hunter had previously reported that the County has enough money to ensure that services are provided until the end of the year.

"What has changed?" asked Scott Parsons.

"Nothing has changed," replied Hunter.

"Well, then it's not an emergency," concluded Parsons, who would have preferred waiting until later in the year before seeking a $50 million loan.

Hunter, Budget Administrator Doran Hamann and Executive John Brown nevertheless insisted that now would be the time to take out a loan. According to Hamann, the County's fund balance has dwindled down to $19 million, compared to $62 million at this time last year. Once the fund balance drops to $5 million, the County will incur penalties for early redemption, making it cheaper and more fiscally prudent to borrow.

Hunter reported that he has been in discussions with five different banks, and can get interest rates in the vicinity of two per cent. There will be no loan origination fee, Hunter assured Ken Kraft.

"The earlier we can get this approval, the easier it is," stated Brown.

Lamont McClure asked whether the $19 million fund balance reported by Hamann includes the County's $10 million rainy day fund. Hamann replied it does not. An incredulous McClure asked why on earth the rainy day fund can't be used when the County claims it is raining. Hamann answered that it would cost too much money to get at the money.

Voting against the ordinance were Scott Parsons, Ken Kraft and Lamont McClure. "It doesn't support the definition of emergency," said Parsons.


Anonymous said...

When is the public hearing on the "emergency ordnance?
Was it introduced by two members of Council and the content specific to its use?
Is there language in the ordnance that makes the ordnance "null n void" if the state Legislature comes through with the funding in two or three weeks?
Is there language in the ordnance which mandates a "pay back" date to the bank?
Just curious?

Bernie O'Hare said...

my memory is far from perfect and the video if that meeting is not yet up. But with that caveat, I know there was no public hearing. I believe that there may have been two Council members designated for introduction. There is no language invalidating the ordinance in the event the state budget impasse ends. There is no pay back provision, but the HRC requires that emergency borrowing must be paid back. The failure to conduct a public hearing does make the ordinance voidable, but I doubt anyone wants to sue. The only real disagreement here was whether to call this an emergency. All council members are willing to fund human services, which is to their credit.

Ben Hedrick said...

The first vote, which was defeated, was to send the details to the finance committee for research and consideration with their review to come before council at the November 19 meeting. I would have been more comfortable with that as the finance committee should be folks who should know about such things plus have more time to do the research and assess the need. I had to go home to research the difference of a line of credit, revenue anticipation note (RAN), and a tax anticipation note (TAN). Also, if I heard correctly, time was not of the essence with this short delay.

Comfort aside, I have the greatest confidence that Mr. Hunter and his folks will handle the implementation in the best and most professional manner.

Anonymous said...

This loan to the Human Services Dept immediately preceeding Jim Gregory's release from prison and inevitable lawsuit against said department is no mystery, think Gregory is only seeking 2 million but maybe they have other suits on the horizon.

Anonymous said...

Councils have always had Admisntrations come running in screaming, "red alert, red alert". It is an old trick. Shame on council for having no backbone. Good cause or not. This is an old tactic that continues to this day. No notice votes should be for real emergencies like "now". Too often used to not have to explain or defend.

Anonymous said...

Wow these "fiscal conservatives" are so quick to spend the taxpayers money, time to clean house!

Anonymous said...

As long as school districts and counties take out loans like this, there will be no motivation for the overpaid, per diem collecting assholes in Harrisburg to reach an agreement on a budget. State employees continue to get paid, schools are open, citizens continue to get services, so nobody is noticing the lack of a budget.

Peter J.Cochran said...

This is ridicules. We should be using funds to teach people 'how to ' be solvent.We have people that move her and want 'everybody else' to wait on them but they drove a Cadillac in the 70's house crap ,they did not prepare for their old age and that should be it. NOW some of you are living well above your means if you calculate what happens later after your oldand your pension has no COLA. Well folks this is life. Spend it now have not later. BUT it should not be put on the responsible families to shoulder this for others and a mistake of judgement otherwise.

Anonymous said...

Remember Peter, this was done by the Republicans you are always defending and propping up. The Democrats you are always complaining about didn't think it was a good idea. This is why people should not assume party labels mean much and then vote straight ticket. Republicans will not vote for a Democrat, even when they claim to.

Anonymous said...

Gregory won't get a penny and no ethical lawyer would ever represent him, especially those who want to get paid. Gregory should be charged for taking money from a PAC that was never registered. He also violated the Hatch Act and should be charged appropriately. He belongs in prison!

Anonymous said...

No good ever comes from a "spur of the moment decision" of public monies without the issue being publicly scrutinized and this will be the same for the 50 million dollar loan. What are the stipulations in the ordnance that the monies must be used for specific items or programs? Hurray for the Democrats..........Hisses and Boo's for the Republicans who supported this crazy borrowing of funds

Bernie O'Hare said...

Though I understand the compelling need, I would have preferred waiting the two weeks. The ordinance could be adopted in time to permit the continued funding of human services, and the "emergency" was solely to make things easier for fiscal officials. It is unclear to me why funding is needed until March.

Anonymous said...

govt at its finest. making good decisions for all of the People. NOT Why is funding needed until March.

Anonymous said...

never let a good crisis go to waste appears to be the approach from both disgusting parties, on all levels of govt.

Ken Kraft said...

March is when the revenues come in from the yearly real estate tax bills, but it is not enough to make up for the pass through money that the state owes us, so I feel they did not tell the whole truth up their on Thursday night. I still have not been told what this will cost nor a real interest rate number. Hold onto your wallets because this is going to cost us

Anonymous said...

He belongs in prison!
The piece of garbage IS in prison.

Chatty Cathy said...

OK. More NC tax money going to nothing!!!!! This so called "Human Services" Dept. lid is about to blow off the pot! The truth is coming!!!! Hey Half Pint........ Just because you abandon ship does not mean you are now innocent! Illegal pay raise of 9.1 % to the MH Administrator, who was only there 7 months, is clueless and does not even live in Northampton County!!!! Boy I can't wait to hear where this 50 million is going to go.......;) ;) Anybody care to meet me for a yoga class on the County tomorrow?? Question EVERYTHING in this DEPARTMENT!!!!!!