After a whopping tax hike this year, Lackawanna County’s commissioners expect to present a 2026 budget next week that keeps property taxes the same, Commissioner Bill Gaughan said Monday.
The proposed budget will also wipe out a projected $5.4 million 2026 spending deficit, Gaughan said after a financial consultant publicly reviewed county finances almost a year after the 33% property tax hike.
"Commissioner (Chris) Chermak and I have been working on this deficit together, and I'm confident that next Wednesday, when we present the preliminary 2026 budget, that we will present a budget that closes that deficit and does not include a tax increase," Gaughan said.
Gaughan declined to say where the money to wipe out the projected deficit will come from. County officials will reveal that Oct. 15 when they present the 2026 budget, he said.
What taxes are
The median assessed value of county real estate this year is $11,000. After the tax hike, that property owner owed $744.37 in county property taxes alone. The county raised its millage rate to 89.98 mills from 67.67 mills, the equivalent of about $20 a month for the same owner. A mill is a $1 tax for every $1,000 of assessed value.
The implementation of new property values Jan. 1 from a reassessment will increase the median value but will also lower the millage rate.
What produced the big tax hike
Faced with a 2024 year-end deficit of $11.3 million and a projected $28 million 2025 shortfall, Gaughan and Commissioner Matt McGloin voted for the massive tax hike over Chermak’s objections to fund a $167.1 million spending plan. They blamed years of reliance on one-time revenue sources by past commissioners who delayed the difficult decisions necessary to properly balance county budgets.
“The county was out of road to kick the can down,” Gaughan said Monday.
Chermak proposed a 6.3% hike for 2025 that Gaughan and McGloin said relied on flawed or unrealistic spending cuts to balance the budget. (McGloin resigned in February for reasons unrelated to the budget.) He and his colleagues engaged in several bitter public budget debates last fall with Gaughan interrupting Chermak's news conference calling for the smaller hike.
The tax hike's budgetary effect
During his presentation, Gordon Mann, managing director for PFM, the consulting firm helping the county rise from its financial mess, said the tax hike greatly improved the county’s position.
“Not all of the deficit has been closed by a tax increase,” Mann said. “There have been some other changes, but a very large part of it has. Candidly, I don't know what a county government shutdown looks like. I've never seen one of those, but I don't know, without the increased taxes, how you pay your bills the rest of the year, right?”
Without the tax hike, the county would run out of cash before this year ends, he said.
“Lots of bad things happen,” Mann said.
If the state General Assembly passes a budget this year and the county receives $10.8 million in expected reimbursements for social services, the county will end 2025 with $3.6 million in cash, Mann said.
Without the state money, the county faces a $2.6 million year-end deficit, he said. That’s still a lot better than last year.
'Better, but not fixed'
Faced with the large deficit to end 2024, the county implemented hiring and spending freezes, moved non-union employees to less expensive health care plans, hired a company to ensure available cash earned more interest and cut prison employee overtime by almost $1 million.
“What I would say is the county's position is better, but not fixed,” Mann said.
Mann said the county doubled its annual contribution to its pension plan to $8 million this year, but that’s still $4 million short of what’s necessary. The pension contribution is expected to rise to $14.1 million by 2030, and the county has committed to increasing the contribution by $1.5 million a year until it reaches the proper level, he said.
In negotiations with its largest employee union, the county is proposing smaller wage hikes and more health insurance cost sharing, Mann said. The combination could save up to $650,000 a year.
The look of financial health
The county’s long-term goals should remain building up enough surplus cash to avoid borrowing to pay bills early each year; having enough money to pay for construction projects and new equipment yearly; avoiding the use of one-time revenues and growing revenues at the same pace as expenses, he said.
Gaughan said his decision to sharply raise taxes has proven correct.
“I knew at that time that if we didn't act, we'd be facing massive layoffs, service cuts, or worse, insolvency,” he said. “That's why I made the tough decisions last year, decisions that were not easy and certainly were not popular, but I made them because it was the right thing to do for the taxpayers, for our employees and for the future of Lackawanna County.”
No more fighting
On Monday, he and Chermak avoided the bitter verbal spats that characterized the 2025 budget process.
“We can't be looking in the rearview mirror. We have to look forward,” Chermak said.
Chermak, who decried the higher tax hike, said county officials are closely watching finances “every minute of every day.” He said county officials must grow the local economy and continue working hard to keep finances straight.
“And it has been neglected for many, many years, and that's how we got to this point,” he said. “But I think we're on the right track. I think we have everyone's attention, and believe me, we are working hard, and we are going to deliver a budget that we can both agree on this year.”
