Northampton County executive recommends tax hike of 9.3 percent for 2012 - UPDATE

FROM THE EXPRESS TIMES

Northampton County residents would pay 9.3 percent more in taxes next year under the proposed 2012 budget introduced today by County Executive John Stoffa.

Stoffa called for an 11.8-mill tax rate to finance his recommended $331.4 million budget in an afternoon news conference at the county courthouse. The hike would represent a 1-mill increase. The owner of a property with an assessed value of $100,000 would owe an extra $100 for a total of $1,180 in county taxes next year.

The 1.2 percent increase in county spending would allow the county to purchase 17 new vehicles, build a work-release center in West Easton and install a new phone system in all county buildings. The budget also includes an expected 2.25 percent raise for many of the county's union workers, he said.

"It is my opinion this is the right thing to do. A tax increase assures our financial stability as we journey down this road to financial recovery," Stoffa wrote in his report on the budget.

The budget also includes operation costs and improvements to Gracedale, the county-owned nursing home residents voted not to sell in May. Keeping Gracedale in county hands has a projected cost of $7.2 million, nearly equal to the proposed $7.4 million the county would raise through the tax increase.
REVIEW THE BUDGET: The proposed 2012 Northampton County Budget is available on the county's website.

However, Stoffa said most of the blame for the proposed hike lies with a swaption agreement the county entered in 2003. Merrill Lynch paid the county about $1.9 million upfront in exchange for the right to force the county to refinance its debt in October 2012 at a variable interest rate. Swaptions are bets that short-term interest rates will stay below long-term interest rates over time.

Right now, the county projects the swaption will cost the county $23.5 million to pay off. That price has jumped $9.5 million in the last nine months alone, he said.

County Council President John Cusick said he hopes the new management at Gracedale will be able to let the nursing home operate on a smaller budget, which would soften the tax hike. Officials with Premier Healthcare Resources, which was hired to manage the company in August, have said they’re confident they will be able to make the facility turn a profit.

“It’s my hope the new management company we brought in will be able to bring that down. The reason we brought in an outside company was to run Gracedale more efficiently,” he said.

County Councilman Ron Angle questioned some of Stoffa's recommendations, particularly the decision to take money from the county's stabilization fund. Stoffa's plan calls for borrowing $5 million from the stabilization fund, which could negatively affect the county's bond rating, said Doran Hamann, budget administrator. That would leave the fund with $20 million, $4 million more than the county is legally obligated to save.

Instead, Angle said he would release his own recommendation in the next two weeks for a budget with no tax increase. He said he would look for a way to balance the budget by reducing the size of government, not dipping into savings. He would not provide any areas he would target for savings.

"The answer is not to deplete our savings account, or we will end up like the state and federal governments," he said.

Councilman Lamont McClure took the opposite approach, saying the county could avoid tax increases by reaching into its tax surplus. Northampton County's surplus is about $18 million more than Lehigh County's, McClure said. There is no reason for Northampton County not to use its reserves to continue the county’s four year run without a tax increase, he said.

“As far as I’m concerned, this budget is dead on arrival,” McClure said.

The budget does not include any new hires for the understaffed court house, a new building for the county's archives or a central location for the human services department.

Cusick said the county council will hold budget hearings beginning Oct. 11 and will look to pass a budget Dec. 1 or 8.

http://www.lehighvalleylive.com/northampton-county/index.ssf/2011/09/john_stoffa_recommends_county.html