SUNBURY - Northumberland County commissioners expect to stick to a long-range financial plan laid out earlier this year that would raise property taxes by 11 percent in 2013 to keep pace with increasing costs.

The county spending plan, which must be approved by the end of the year, will total approximately $73 million, $2 million more than this year's budget and up from $67.5 million in 2011.

Next year's increases include $1.7 million more for employee health insurance and approximately $700,000 more in wages. The county must also borrow another $10 million to comply with a federal mandate to upgrade the 911 center.

A 2.5-mill increase for the general fund is projected to generate $1.85 million, since one mill is equivalent to $740,000. But commissioners noted the collection rate for each mill usually comes out to $700,000 since some people don't pay their taxes.

Total millage would rise from 20.318 to 22.818, which will remain the same

for at least the next three years under the plan outlined in June by Commissioner Chairman Vinny Clausi. He said at the time that if the county did not raise taxes and borrow money, it would have a $40 million deficit by 2022.

The county raised taxes by 1.95 mills in this year's budget and, by state code, cannot exceed 25 mills.

Clausi, discussing the budget earlier last week prior to an operation Wednesday morning that will have him sidelined for at least two weeks, said commissioners previously lowered the millage rate by 3.367 after generating $16.5 million from the sale of Mountain View Manor effective Jan. 1, 2010. However, that money can only be used to pay off long-term debt.

Preliminary approval of the 2013 budget is expected at the commissioners' Dec. 4 meeting, with final approval likely at their Dec. 27 session.

$10M for 911 center

Jeffrey A. McClintock, county budget director and chief financial officer, said the $2 million budget increase is needed to cover the following:

- A $1.7 million hike in health insurance for employees.

- A $500,000 county contribution to the workers compensation fund.

- $800,000 in retirement benefits.

- A $10 million loan for upgrades to the 911 center.

McClintock said the county obtained a $2 million loan this year and plans to borrow $10 million more in 2013 to pay for the 911 center upgrades, which involve constructing three new communication towers to comply with a federal mandate to change from a wide- to narrow-band frequency system by 2013.

He said the county chose to seek the loans over a two-year period; the bonds are tax-exempt and at lower interest rates as long as they don't exceed $10 million, he said.

McClintock said the 911 upgrades and the bond issuance required to pay for it are included in the 2013 budget.

"The frequency change was mandated by the Federal Communications Commission 13 years ago, but was ignored by prior administrations until now," Clausi charges.

The deadline to change over to a narrow band frequency is Jan. 1, "but we are confident the federal government will grant a waiver to us and extend the deadline for the upgrades because there's no way we can meet it," he said.

No more layoffs?

Asked if the continued financial strain on the county could lead to more layoffs in the new year, Clausi said he didn't plan on that happening.

"We've cut to the bare bones during the past five years. County government won't be able to function if we make more cuts," he said.

Clausi noted the county budget has dropped from $93 million when he took office in 2008 to $73 million for 2013.

"I'm proud of my record in trimming unnecessary costs," he said.

A large chunk of that reduction came from the sale of Mountain View Manor and last year's move to shut down the county's transportation department and privatize transportation services. Clausi said the transportation department was losing $500,000 per year.

Although Clausi was adamant about not making any more cuts in personnel or services, Commissioner Stephen Bridy isn't as certain.

"I'm always looking at different avenues to use technology to make government run more efficiently, and if that means making staff cuts while maintaining or improving efficiency, so be it," he said. "I'm always looking to save a dollar."

Bridy added, "I don't want to see anybody lose jobs, but I want to see taxpayers' dollars used as efficiently as possible."

Bankruptcy possible

Bridy said salaries for union and non-union employees, health care costs, retirement benefits and other expenses have risen approximately $3 million in the past year.

Bridy commended McClintock for working with department heads in staying within their budgets. "We've been able to cut $1 million in expenses over the past year by the departments tightening their budgets and making sacrifices," he said.

The commissioners said they plan to continue discussions with department heads about their budgets in the future.

Bridy was again critical of some of the unions with which the commissioners have battled in negotiations for changes to health care contribution rates and wages.

"Unless the union comes to the table to negotiate, Chapter 9 bankruptcy could be right around the corner," Bridy said.

Commissioners and Teamsters representatives battled this past spring, at which time the union said the county approved raises for non-union employees and didn't increase their health care co-payments. The county said the raises were necessary to keep supervisors who are in charge of union employees from making "thousands less" than those they supervise.

The Teamsters also said county officials ignored their advice about other means by which they could cut costs.

When asked what the county will do to balance the 2014 budget if health care costs rise another $1.7 million next year, the commissioners said raising taxes, cutting non-mandatory services or filing for bankruptcy are the only options.

No more privatization

At this time, the commissioners have no plans to privatize any other departments, noting many of the agencies within the county provide mandated services.

Commissioners said problems in Northumberland County government are health care has doubled to $5.2 million, union wages have increased by $3.5 million in five years and state and federal funding to agencies like Children and Youth, juvenile court services and Behavioral Health and Intellectual/Development Services has been drastically cut.

Commissioner Richard Shoch said the state funding cuts to those agencies have forced the county to reduce personnel, close three senior action centers and withdraw from the waiver program for Area Agency on Aging.

As for possible future personnel cuts or reduction in services, Shoch said, "I anticipate those decisions will be largely driven by state funding availability."

As for health care costs, Shoch added, "I believe we need to look at all viable options, including forms of self-funded plans, in order to control these rising costs. To that end, we need to ensure that health insurance providers vying for the county's business are able to compete on a level playing field with each other, and that we are getting them all the information they need to competitively bid on the business."

Shoch said the county is facing some significant liabilities that he believes should be shifted to the appropriate parties rather than having them placed on the backs of taxpayers.

Clausi said lawsuits filed against the prison over the past five years have cost the county approximately $1 million. In accordance with recommendations set forth as a result of a lawsuit filed by the Lewisburg Prison Project against the county, Prime Care Medical Inc., Harrisburg, was hired three years ago to provide medical services to inmates. Clausi said the county, which previously provided its own nursing staff and medical services, pays approximately $660,000 annually for those services now.

Help from above

Clausi predicted every county in the nation will go broke by 2020 from health care costs contained in union contracts.

"The county can't fix it," he said. "It's up to our state and federal governments to change the laws."

McClintock said the county faced a $1.5 million fund balance deficit in 2011, which led Clausi to develop his long-range plan. McClintock said a $2.5 million to $3 million fund balance is needed by 2015 to correct cash flow issues. Cash flow problems exist because the county only receives tax payments during a certain time of the year and has no constant influx of cash that would better allow it to make payroll and meet other operating expenses.

Clausi said a tax increase to supplement the general fund also may be needed in 2016 and beyond, depending on the county's financial condition, which he said no one can predict at this point.

According to county figures announced at the May 31 press conference, total revenue for 2012 was $15,035,320, including $13,381,420 in the general fund and $1,653,900 in debt service. Through the tax increase by the end of 2015, total revenue will jump to $18,180,320, including $15,231,420 in the general fund and $2,948,900 in debt service.