Fixing Lackawanna County’s troubled finances will take a mix of solutions that include bargaining favorable union contracts, boosting pension plan contributions and slashing overtime, a consultant said Thursday.
Gordon Mann, managing director for PFM Group Consulting, did not say the county can avoid future property tax hikes, but should aim to avoid double-digit hikes like the 33% imposed this year.
“This is going to be a multi-year process to get the county back on its feet financially,” Mann said. “What you don’t want is another 33% tax increase going into next year.”
Mann summarized PFM’s 163-page suggested long-term financial plan at a public presentation at the county Government Center. The county commissioners hired PFM last year to develop it. One page is titled, “Turning around a battleship in a bathtub.”
The county entered 2024 with only $6.1 million on hand to pay $18.5 million in unpaid bills, including $8.9 million more than 30 days old.
When PFM began its work, the county faced an $11 million shortfall and projected that would balloon to $27.2 million in 2025 and $41.9 million in 2029.
In August, after Mann’s first presentation, the county commissioners froze non-essential hiring and spending and froze salaries for non-union employees in 2025.
Commissioners Bill Gaughan and Matt McGloin also voted for the tax hike over the objections of Commissioner Chris Chermak. They repeatedly said they had no choice because of the county’s poor financial condition and past mismanagement.
The tax increase and other measures are expected to produce a balanced budget this year. However, PFM projects the county will end 2025 with a surplus of just $1,131, far below the more than $20 million only a few years ago.
Credit-rating agencies, which grade an entity’s ability to pay back borrowing, prefer governments have surpluses of more than 10% of budgeted annual spending. Since September 2023, one rating agency, Standard & Poor’s, has twice downgraded the county’s bond rating, partly because declining surpluses showed deteriorating finances.
To improve finances, PFM recommends:
- Adding a senior financial officer and reconciling bank statements with county budgets.
- Allowing moderate salary and wage increases.
- Redesigning health insurance plans to reduce costs.
- Gradually boosting pension plan contributions from $8 million this year to $14 million in 2030 to create a financially sound plan that does not require further increases in annual contributions.
- Creating a budget that details each county job, its salary and benefits, to enable better discussions on spending at budget time.
- Boost full-time prison guard staffing and restructure sheriff’s department scheduling to eliminate overtime.
- Increasing salaries for assistant and deputy district attorneys because current salaries are low compared to other counties.
- Reduce the county’s incarceration rate by increased use of non-prison punishment. Mann said the goal would be to eventually close a prison wing, reducing staffing needs. He said the county has the second highest incarceration rate in Pennsylvania.
Chermak called the plan “a very good start.”
“We have a lot of work to do, but I appreciate what you've done and look forward to try to get this under control,” he said.
Gaughan said the plan is “a crucial step towards securing a stable and sustainable future for our county.”
“What I've said from the beginning in trying to describe this process is that it's almost like opening the hood of your car to check how the engine is running,” he said.
PFM’s analysis uncovered weaknesses to address, he said. He said the county has either implemented or begun implementing 20 of 42 recommended measures to produce a sounder budget.
“The 33% tax increase in this year's budget was a difficult but necessary decision,” he said. “It was the result of past administrations neglecting long-term financial planning and making short-term choices that ultimately, in the long run, harm taxpayers. We cannot afford to repeat those mistakes. As the old adage goes, when you're in a hole, stop digging.”
