Zrinski: NorCo Budget Shortchanges Retirees and Gracedale - State Budget Shortchanges Seniors

I told you that NorCo Exec Tara Zrinski was a big hit at the recent retirees' luncheon. She talked about it during her report to County Council at last night's meeting. What's more, she spoke about how recent county budgets have shortchanged both retirees and Gracedale, She added that the state budget is having an increasingly adverse impact on seniors. 

Here's the bad news for retirees: "Retirees are very concerned that a contribution was not budgeted, in part of 2025, falling behind by $4 million in all of 2026, neglecting a payment of $11.6 million. Each year, in October, we receive a recommendation from our actuaries called the actuarily determined contribution. Or ADC. Now, that doesn't mean we're $16 million at a deficit. If we make the ADC this year, we believe we'll be back on track. We are currently at a 90% funded rate. Thank you to the fine investment by PFM that they have made on behalf of our county and our retirees. But we know that the sum that we are going to have to contribute is several million dollars, and that was not in the 2026 budget. Thus, when we say the 2026 budget is working as it was designed, we are saying it was designed to not fund the pension in 2026. That trend cannot and will not continue."

The actuarily determined contribution for the pension fund in 2025 was $12.8 million, but the Lamont McClure administration only kicked in $8.2 million. In 2026, the actuarily determined contribution was $11.6 million, but McClure's budget opted to pay nothing. 

The county also maintains a retiree healthcare fund to cover the medical expenses of retirees entitled to them. In 2025, the actuarily determined contribution for this fund was $2.6 million. McClure shortchanged it by a million. In 2026, the actuarily determined contribution for retiree healthcare was $2.2 million. McClure paid nothing.

Here's the bad news about Gracedale, which already received a $7 million county contribution this year to fill in last year's deficit: "[T]here will be some county contribution to Gradceale. That will most likely be several million dollars that was also not budgeted in the 2026 budget."

Say what? When former Exec Lamont McClure proposed the 2026 budget from Gracedale's chapel, he stated that Gracedale would need no county contribution. The Administrator, Michelle Morton, told County Council her budget was balanced. Both of these statements are apparently untrue. 

Finally, there's bad news for seniors. Zrinski has previously said the Area Agency of Aging was getting shortchanged $400,000 this year, which has resulted in the closure of two senior centers. But last night, she warned of more cuts. "[T]he state has informed us that in our 2027 budget allocation, the area agency on aging should be, the allocation should be estimated at the 2018 2019 levels." She would like to continue offering the same services to seniors as they currently receive. "I would like to offer more services, or at least the ones that we're currently offering to seniors at the level that our seniors need to maintain their health, their quality of life, and well being."

Zrinski went on to say that a 1991 County Council resolution prevents the county from paying more for  for human services beyond the match it receives from the state, and she suggested that be repealed. 

There's no need if it is only a resolution. A County Council binds neither the Executive nor future Councils. That would require an ordinance. 

I will have lots more about County Council and its committees next week. 

Browning: How to Stop Deficit Spending in County Government

Pick a county. Any county. Most of them engage in the same deficit spending that we see in Washington. But unlike the Beltway Boyz, they can't print money. Eventually, they run out of it and have to impose a tax increase. That builds up the fund balance, opening up the door to more deficit spending. This has happened in both Lehigh and Northampton County in what can only be regarded as a bipartisan failure. It makes no difference who's in charge. It's just too tempting to spend down reserves instead of imposing a modest tax hike when it is needed. Dean Browning, a former Lehigh County Commissioner who is running again, has a plan to put both counties back on a firm financial footing - a true balanced budget amendment to both Home Rule Charters.

Though both counties require a balanced budget, what is created is a fiction. The spending is almost always greater than the revenues, so counties use cash reserves to plug the gap.

Over the past dozen years, lehigh County has had two tax increases. Northampton County has had three. Browning explained his proposals to Lehigh County Commissioners at the March 11 meeting.

"[B]udget deficits are caused by elected officials approving budgets that put in place a plan to overspend. Approving budgets where you plan to spend more than you take in and then hoping for the best is not sound fiscal policy.

"Families don't budget that way, at least not if they want to stay out of bankruptcy. Businesses don't budget that way, at least not successful ones. And Lehigh County shouldn't budget that way. Otherwise we are no better fiscal stewards than those in Washington - and In Lehigh County taxpayers deserve better."

Northampton County's Home Rule Charter considers the budget balanced so long as the proposed expenditures do not exceed the amount of funds available. [Section 703(b)]. Similarly, Lehigh County's Home Rule Charter allows the "balancing" to be accomplished by using "the total of estimated income AND cash reserves."

Brown insists this has to change. He is suggesting a "balanced budget amendment" to the Home Rule Charter in Lehigh "that would prohibit the use of cash reserves as a means to balance the budget." There would be exceptions for emergencies or to give a credit to taxpayers when the underlying budget is still balanced, but that would need six votes.

Of course, Browning was politely ignored. But people might start paying attention of he gets the Republican nomination. He's running against a group of four other candidates - Amanda Holt Vic Mazziotti, Brad Osborne and Marty Nothstein - who have already run disappointing robo calls attacking Browning. He'll have to respond, and the result will be an ugly slog in which no one, least of all the people, benefit.

Browning's balanced budget amendment is a good idea, and he should be given the opportunity to implement it. Someone should pick up on this idea in the People's Republic of Northampton County, too.

NorCo Council Officially Establishes a Rainy Day Fund

By a 6 to 2 vote, Northampton County Council last night adopted an ordinance that officially establishes a rainy day fund that will segregate between 5-15% of the general government portion of each annual budget. Based on the current budget, that's between $6.9 and $20 million. A one mill tax increase, approved by Council last year will go into this fund, which is designated officially as the "committed fund balance." This measure was proposed by Hayden Phillips and Glenn Geissinger.

Before this measure was adopted, Budget Administrator Doran Hammann was asked what he thought. Hammann told Council that this fund is something "rating agencies would look at" when the County decided to float its next bond for capital improvements. "The bond rating is very critical to the price you pay," he observed. "I see no problems with moving forward."

"I don't see why we raise taxes and put it in a piggy bank," complained Ken Kraft.

"It's not a piggy bank," responded Glenn Geissinger. "I don't want our infrastructure to fail," he said, meaning the bridges and other capital improvements that are needed down the road, including $15 million in repairs at Gracedale.

Lamont McClure derided the notion of raid=sing taxes and adopting this measure "to please Wall Street and please accountants. He stated the fund balance is currently approaching $30 million.

As originally drafted, this fund would be in what Phillips called a "lockbox" that could only be opened by a 2/3 vote of county Council. Lamont McClure proposed giving the key to a bare majority, warning that a minority could thwart the will of council. That reasoning swayed Glenn Geissinger, who provided the fifth vote to an amendment supported by McClure, Kraft, Scott Parsons and Bob Werner.

Democrats Scott Parsons and Bob Werner joined four republicans in establishing this fund. "It is he right thing to do," Parsons simply explained. McClure and Kraft were the sole holdouts.

Peg Ferraro, fighting an illness, was absent. .

NorCo Council's Hayden Phillips - "We Need a Tax Hike"

Hayden Phillips is NorCo Council's conservative conscience 

Is Northampton County poised to adopt a tax hike, even though none has been proposed by the Executive? Will it actually be proposed by the most conservative voices in the County? Will a desire for good government finally transcend party ideologies on the County level? As the days tick off toward December 16, when a Budget of some kind must be adopted, answers to these questions will be more clear. But after Council's November 21 meeting, it's safe to say that a tax hike is on the horizon.  

Brown's New Budget Reduces Fund balance to Just $1 Million

The storm clouds began gathering the day before, when Fiscal Director Jim Hunter told Council's Finance Committee that the County will end 2014 with a fund balance of just $21 million. This news comes at a time when Executive John Brown has submitted a new Amended Budget. It removes a $20 million line of credit that Council Solicitor Phil Lauer advised might be illegal. It makes up for that missing line of credit by spending down the reserve..

Since Executive John Brown is projecting to use $20 million of that fund to balance the 2015 Budget, that means the County will start off the new year with a reserve of just $1 million. That's risky business in a County that spends an average of $8-10 million per month.

It's also contrary to advice from the County's independent auditor. In June, she recommended that there should be at least six months of expenses in the till at all times, which is approximately $60 million. Other accounting firms are a little more lenient, suggesting that one or two months are sufficient. Even others suggest 10% of the total budget.

Council's Most Conservative Members Urge Tax Hike

This new budget, along with Hunter's recent disclosures, resulted in a sleepless night for Council member Hayden Phillips. Phillips, a member of the Lehigh Vally Tea Party, ran his entire campaign based on the principles of limited government, individual rights and fiscal responsibility. He is without question Council's most conservative member. Yet it is this conservative who called for a tax hike.

"I do my business and make decisions in my life based on how well I sleep," confessed Phillips. "yesterday, when we were told that we're going to eat into the reserves and go into a new budget with $1 million of reserve, I didn't sleep well. I didn't sleep well at all. I think if we do that, we are really fiscally irresponsible. And how can we cut $20 million? I don't see how we can ct $20 million. I'll go on record, I'm thinking we need a tax hike."

Phillips' remarks were echoed by Mat Benol, arguably Council's second most conservative member.

"We're in a mess," he admitted. "If a tax increase is needed, it's unfortunate, but we can't be dipping into our fund balances the way that it's proposed."

Ron Angle Challenges Council to be Leaders

Phillips and Benol may have been inspired by comments made by Ron Angle, a fellow conservative and former member of Council, earlier in the meeting.

"A leader is a person who makes the tough decisions that need to be made," he told Council. "Sometimes, it's a tax increase."

Angle was also highly critical of Brown's budget leaving just $1 million in the budgetary reserve, calling it "insane". He implored Lamont McClure and other Democrats to stop trying to make Brown look bad. "He's doing a pretty good job of it on his own," he observed. "You need to spend your time coming up with other ways to make things happen that are good here,"    

Brown declined to respond to Angle's scathing assessment or provide any report at all.

Open Space Funding Pitched

Aside from $1 million in funding that has been promised for municipal parks, Brown's budget contains no finding for farmland preservation or purchases of environmentally sensitive land. Brown has told Council that open space activists are willing to wait. But that's not the case for Bill Mineo, a member of the Open Space Advisory Board, and Don Moore, a member of Plainfield Township's Environmental Advisory Council. Angle also urged Council to restore funding for farmland preservation, noting it is the number one industry in Pennsylvania. "When that land is gone, it's gone forever."

Though Council has no power to make revenue estimates, it does have the power to adopt a higher millage rate than the one proposed by the Executive. That matter and Budget amendments will be considered again when Council meets on December 4. If Council fails to adopt or amend the executive's Amended Budget by December 16, his Budget will be deemed adopted.

Is $20 Million Line Of Credit Legal? Ask Phil Lauer

"Who, me?" Phil Lauer looks into the camera

Is it legal to balance a budget with borrowed money?  More specifically, is it legal to balance Northampton County's 2015 Budget with a $20 million line of credit, as Executive John Brown has proposed? He conceded last night that the line of credit is needed to balance the budget, though it may never be necessary to use it if the County holds the line on spending.

Here's what the Home Rule Charter, Northampton County's Constitution, says:

• Section 703(b): Balanced Budget. The total of proposed expenditures shall not exceed the total of anticipated funds available.
• Section 707: "No revenues from the sale of bonds or other forms of indebtedness shall be appropriated to finance annual operating programs or services, except emergency notes and bank borrowings in accordance with § 1.7-705(b)." [Emphasis added].
• Section 705(b): "Emergency Appropriations. To meet a public emergency affecting life, health, property, or the public peace, the County Council shall have the power by emergency ordinance to make emergency appropriations in accordance with the provisions of § 1.6-603. To the extent that there are no unappropriated revenues available to meet such appropriations, the County Council shall have the power by emergency ordinance to authorize the issuance of emergency notes or bank borrowings, which may be renewed from time to time, but the emergency notes or bank borrowings of any fiscal year shall be paid no later than the last day of the next fiscal year."

Northampton County's Home Rule Charter commands a balanced budget. It bars borrowing money for operational expenses, barring an emergency affecting life, health, property or public peace. There currently is no such emergency. Approving a budget now that authorizes the borrowing of money later, and for the express purpose of paying operational expenses to balance the budget, is completely illegal.

A confident Brown stated he is waiting for a legal opinion, which tells me he's getting one that tells him what he wants to hear as opposed to what the law says.

Though Glenn Geissinger has been reduced to a cheerleader who endorses whatever Brown wants, conservative Hayden Phillips is another story. "I don't think I can sign on to that. This is Basic Accounting 101."

Council has asked for an opinion from their Solicitor, Phil Lauer. I suspect what he says tonight will determine whether Brown's Budget is dead on arrival.

Brown Proposes No-Tax-Hike Budget, But Is It Balanced?

Updated 2:05 pm:

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.

How NorCo Can Avoid A Tax Hike Next Year

I've written several times now that I don't know how Northampton County can avoid a tax hike next year. But yesterday afternoon, I met a statesman who explained how it can be done.

This year, the County is making a $13 ARC (required annual contribution) on the pensions. That's like making the minimum payment on a credit card. The County did well this year with investments. So next year, the County will have a lower ARC, but it will still be close to $13 million because these payments are based on a five-year average.

The suggestion is to pay only a $3 million ARC next year. That will giver the County $10 million in breathing room.

The downside to this suggestion is that it will be flagged by independent auditors and will damage the County's credit rating, making borrowing more difficult.

I do not endorse this plan, nor does the statesman who presented it. This just explains how it might be possible to keep a tax hike away another year, but at a very dear cost.

Bethlehem Police OT Budget Being Handled Properly

The Express Times' Lynn Olanoff reports that Bethlehem police have spent their entire $100,000 OT budgeted for this year and need for money. Now as cRaZy as this might sound, that's actually a good thing.
Instead of creating a big OT buffer into a municipal budget, it is a good idea to set it a bit on the low side, and force department heads to come in and explain the need for an increase, justifying it to the governing body. In Bethlehem's case, it appears that police can explain why they have gone over their OT budget This exercise is infinitely preferable to a big cushion that can be spent in December.  

For 6th Straight Year, Hanover Proposes No Tax Hike Budget

Steve Salvesen (L) and Public Works Director Vince Milite (R)

For the sixth year in a row, Hanover Township is considering a no-tax increase budget for next year. Despite a projected 3% drop in revenue and a last-minute increase requested by the Bethlehem Public Library, Hanover Township Manager John "Jay" Finnigan has still cobbled together a $7.2 million proposed 2013 Budget that holds the line on taxes.

It continues with the usual 3.9 mill tax rate and 0.5 mill fire tax. Under these rates, a home assessed at $50,000 will have an annual tax bill of $220.00.

Finnigan told Supervisors, at their November 27 meeting, that the Township was fortunate to have received $92,000 for its interest in 248 Broadhead Road, where the Colonial Regional Police and District Judge James Narlesky are based. "We'll be able to buy two trucks with that," he noted.

Steve Salvesen is concerned that performance-based raises for some Township workers will be negated by increases in health and dental insurance. "Contrary to what our President has said, insurance premiums are going up," observed the veteran Supervisor. Chairman John Diacogiannis lamented, "I hope this can turn around."

In addition to holding the line on taxes, Hanover Township residents have already seen their trash removal rates drop to about $230 per year with a single hauler contract. Residents in the East Sewer district have also seen a slight decrease in fees.

Supervisors will vote on the proposed 2013 Budget, which is posted on the Township's web page, at their December 18 meeting at the Municipal Building located at 3630 Jacksonville Road. That meeting, which starts at 7 PM, will be the Supervisors' only meeting in December.