Lackawanna County plans to borrow up to $5 million to cover the costs of providing social services as the state budget impasse drags on.
Without an adopted 2025-2026 budget, the state has halted usually routine reimbursements to counties for social services programs.
The county will establish a line of credit with Fidelity Bank and draw on that as needed at an estimated interest rate of 6% until April 1, according to the bank’s proposal.
The county Board of Commissioners approved the line of credit at a meeting Wednesday.
“Hopefully, maybe if they settle the budget issue, we won't have to dip into it,” Commissioner Chris Chermak said. But for now, it'll be a safety net, just in case.”
Budget impasse background
Gov. Josh Shapiro proposed spending a record $51.5 million in his Feb. 4 budget address.
The state General Assembly was supposed to pass a budget that Shapiro could sign by July 1, the day Pennsylvania’s new fiscal year began.
The state House, led by a Democratic majority, passed a $50.6 billion version on July 14. The state Senate, led by a Republican majority, passed a $47.6 version on Aug. 12.
On Aug. 25, Shapiro said he thought a budget deal was close, but the Senate ignored his compromise $49.6 billion budget. On Oct. 8, the House passed a $50.25 billion version. On Oct. 21, the Senate sent a $47.9 billion version back to the House.
The stalemate endures and about half a dozen other counties are already looking into borrowing, too, according to published reports.
Gaughan explains borrowing
In an Oct. 17 letter to County Commissioner Bill Gaughan, state Budget Secretary Uri Monson said Lackawanna County would receive almost $43.7 million in state and federal funding under the most recent House budget.
Gaughan read the letter, which blames Senate Republicans for the stalemate, during the meeting.
“We have to have a $5 million line of credit, like most other counties in Pennsylvania who are trying to figure this thing out, because as every day passes without a budget, the services that we provide to the youngest, the oldest, the most vulnerable citizens in the county are under threat. And if we get into December, or, God forbid, January, we are going to be in an awful lot of trouble,” Gaughan said.
Gaughan said the thoughts keep him up at night.
“I know it keeps the other commissioners up at night, and everybody in this building who provides these crucial programs to the people who need (them) most,” he said. “So, I would just urge the people in the state Senate to get their act together and get a budget passed, because, you know, they're not the ones that are being hurt.”
Budget woes forecast
At an Oct. 6 review of the county’s financial picture, consultant Gordon Mann said the county expected $5 million in state reimbursement in September, but the budget impasse held that up.
“That $5 million in cash from the Commonwealth to the county is a big deal,” Mann said. “Well, it’s potentially the difference between running out of cash (before the end of 2025) and not.”
With the state reimbursement, Mann projected the financially struggling county would end the year with $3.6 million in cash. Without it, the county would end the year with a $2.6 million deficit.
“In essence, you would be sticking bills aside and waiting to pay them until next year and getting back into that shell game again,” Mann said, referring to the county delaying paying 2024 bills until 2025 because of a year-end cash crunch.
In an Oct. 15 briefing on the county’s 2026 budget, which doesn’t raise taxes, chief financial officer David Bulzoni summarized the county’s potential plight without the $5 million infusion of state money.
“So, looking at it in the context of 2025, October, (we’re) okay, November, problem. December, absolute disaster if the state does not pass a budget,” Bulzoni said. “So, the 2026 budget is important, but the other side of my brain is thinking about, how do I get through the end of the year if the state doesn't pass a budget and the federal government ... shut(s) down?”
Commissioners Brenda Sacco and Chris Chermak did not comment on the budget, but all three commissioners voted to approve the line of credit.
Senate Republicans have blasted Shapiro for offering a budget that spends too much and relies too heavily on the state’s Rainy Day Fund, a fund meant for emergencies.
Shapiro’s budget calls for using $1.6 billion from the fund. Republicans say using that would only mean larger deficits in the 2026-2027 budget and future years.
Sacco's first business meeting
For Sacco, the meeting marked her first for conducting official county business. Her first meeting overall was a Board of Commissioners meeting Oct. 27 that reorganized the board and made her its chair.
She also attended three budget hearings since then and one after the meeting.
Sacco, who was sworn in to replace former Commissioner Matt McGloin on Oct. 22, also seemed to acknowledge once again she would soon leave office.
Though she once expressed hope she would serve the rest of McGloin’s term, which ends Jan. 3, 2028, Sacco last week said in a social media post that she would respect the “lawful result” of a special election Tuesday for commissioner to serve out the term.
Commissioners congratulate Welby
At the meeting, Sacco congratulated everyone who ran for office in the election Tuesday and “those who were victorious, and especially my dear friend Thom Welby.”
Welby, a Democrat, won the special election for commissioner, defeating Republican Chet Merli and independent Michael Cappellini.
Gaughan and Chermak also congratulated Welby. Gaughan called him “a great person” who comes from “a great family.”
“Thom has a long record of public service and a deep understanding of the needs of the people of Lackawanna County,” Gaughan said. “I have ... always respected his dedication to our community, and I look forward to working with him in a professional and collaborative way to move our county forward from the very beginning of this entire process.”
Gaughan, part of the elections board that called for the special election, said voters deserved to have a choice.
“And the people have spoken, and they spoke very clearly,” said Gaughan, who supported Michael Cappellini, the third-place finisher for commissioner. “Yesterday's result is a reflection of that belief in democracy and transparency.”
Chermak, who abstained from supporting the special election, said the results were “long-awaited.”
“So, I look forward to moving forward when Mr. Welby gets here,” Chermak said. “It's a tough thing to put your name out there. It's tough to spend every night of the week out pounding the pavement and asking for money. And it takes a lot, and it takes a certain person.”
Welby won’t take the oath of office until the county Board of Elections certifies the results.
County general counsel Don Frederickson said the state Department of State wants county election boards to certify results by Nov. 24, three days before Thanksgiving.
The county commissioners meet next on Nov. 19.
