Lackawanna County’s proposed 2027 budget keeps property taxes the same, but the chief financial officer warned of big trouble ahead unless the county increases taxes, finds other revenues or cuts costs.
“Hell is going to visit us for breakfast, gentlemen, in 2028, and I'm only forewarning you,” CFO David Bulzoni told the county commissioners after detailing the new budget.
The county tax rate will remain 5.79 mills. With the average assessment of a property about $244,000, the average county tax bill is about $1,412.76. The total does not include local government or school district property taxes.
The budget proposes spending a bit less than $190 million, but with just shy of $186 million in revenues, leaving a shortfall of about $4 million.
At the outset of budget talks, the shortfall was about $8.9 million, but adjustments chopped that. The adjustments included using $1.5 million from a healthcare insurance premium surplus and adding $1.5 million in reimbursements from the county stadium authority.
The commissioners promised to work on trimming the $4 million shortfall by the time they adopt a final budget, but Bulzoni made it clear the options are limited.
“Well, my middle initial is M for Michael, not Merlin,” Bulzoni told the commissioners, referring to the mythical magician/prophet in the tales of King Arthur and the Knights of the Round Table. “There's only so many things that we have the ability to do now. We are looking at other adjustments. This has been a continuous process, and we will get that (deficit) number down. I don't have any doubt about that. But obviously, if we're building into that process, the assumption that there will be no real estate tax adjustment in 2027, then that number has to be brought to zero, and getting there is going to be a challenge.”
Bulzoni outlined the reasons for the county’s continued financial struggles in detail.
First, he said the total assessed value of all county real estate rose by only 0.57% in 2026, which means only about 0.26% more in property tax revenue.
Meanwhile, county expenses rose by 5.1%, led by a 14.8% increase in health care costs, an almost 16% increase in higher pension contributions and a 15.3% increase in liability insurance premiums, Bulzoni said.
The county joins other counties in a consortium to control health care costs.
“Now we are looking at a number of options that help to reduce that cost, but that cost can only be reduced by so much,” Bulzoni said. “It's still going to be a significant annual expense.”
He said the pension cost will continue to rise by about $1.5 million a year until 2030 to property fund the retirement plan. That’s to make up for many years when the county contributed too little or nothing, he said.
“It's going to be a built-in expense every year,” he said. “And lastly, liability insurance, and I think we're all aware, from a personal standpoint, of how our insurance costs have increased. Auto insurance, homeowners’ insurance, post-pandemic particularly, have increased really significantly. It's no different for the county, and particularly in the case of our liability insurance. We live in a litigious society. That has an impact on the county.”
Bulzoni said the county commissioners set a policy to have an annual budget surplus of 12% of general fund revenues. The county hasn’t shown it can achieve that consistently, he said.
“Until that balance surplus achieves a level of consistency, the county can't rely on its fund balance to plug budget holes,” he said. “That was something the county had done time out of mind in the past. It's the reason that we have a (bond) debt rating that's one notch above junk or speculative grade.”
Bond rating agencies worry when the county’s budget surpluses dwindle. Lower bond ratings mean the county must pay higher interest rates when borrowing.
Bulzoni said 5% higher costs isn’t that bad considering current inflation rates, but the county still has to come up with more revenue.
“But regardless of where we start, the county delivers services. That's really what we do. With services, you don't really have as much latitude to be able to cut and not impact the delivery of those services,” he said. “In other words, we have to fund those services consistently.”
Which means coming up with more money, he said.
“It doesn't take the expertise of a strategic management planning program report to understand that adjusting revenues on a recurring basis is a necessity,” he said. “Otherwise, what happens is what has happened, and not just while I was here, but even prior.”
Before the 33% tax hike, budget deficits ballooned from $8 million to $15 million in earlier years to a projected $37 million in 2025 without the tax hike, he said.
“And I don't think we want to go back to that,” he said.
