County budgets increasing due to CYS, pension, health costs
An Observer-Reporter story nearly a month ago that applied the term “Shaleonaire” to Washington and Greene county governments drew the attention of a North Strabane Township resident who called his county’s budgetary increases over the past seven years “appalling.”
Washington and Greene have seen millions of dollars of income because of natural gas extraction, either directly from leases and wells or through Pennsylvania’s Act 13 impact fee. Last month’s story went on to note that Washington County gained its first income, known as a royalty payment, from a producing well in Cross Creek County Park in October 2007 in the amount of $8,573, a mere drop in the bucket to a county that had an annual budget of approximately $56 million that year.
As more wells began producing, the Washington County treasury’s total from royalties alone continued to grow, through the end of September 2013, to $8,596,199, according to the county planning commission. But so had the county budget, to approximately $80 million budgeted for 2014.
Add in $9 million Washington County received in impact fees since their inception, and the county has seen more than $18 million in Marcellus-related money coming into the treasury. Greene County received more than $6 million in impact fees, and a smaller amount in lease and royalty payments.
Washington budget climbs 40 percent
Clarence Spicer of North Strabane calculated an approximately 40 percent increase in the Washington County budget over that period and queried in a letter to the editor, “I am curious as to the major causal factors. Could they be increases in fixed costs, such as the number of employees, compensation for them and the cost of fringe benefits, including retirement and medical coverage?”
The number of county employees hasn’t changed much over the seven-year period. In the dark days of the Great Recession, the majority of county employees had a year-long wage freeze in 2010 and during that same period, some elected officials, who receive an automatic 3 percent raise every year according to an ordinance passed by the then-board of commissioners in 2001, rebated their raises to the county treasury. Commission Vice Chairman Diana Irey Vaughan is the only commissioner from that board still holding county office, and over the years, both she and Commission Chairman Larry Maggi have advocated for a rollback of the elected officials’ automatic 3 percent increase. Setting of county elected officials’ salaries must be done at a specially-advertised meeting and it cannot take effect during the commissioners’ current terms of office.
By law, Washington and all Pennsylvania counties must provide a defined benefit to its retired employees. The pension plan is not subject to collective bargaining or labor arbitration decisions, and Washington County workers pay 7 percent of their salaries into the pension fund.
Taxpayers’ contribution in 2014 to the county employees’ pension fund will be $4,059,517, up from $3.5 million this year and $3.7 million the year before. In 2007, the annual required contribution to the county pension fund was $1,489,946. Of that, 56.88 percent was paid by county tax dollars from the general fund, approximately $847,500, according to County Controller Michael Namie, secretary of the retirement board.
About $1,873,900 of the annual retirement contribution is either reimbursable through state or federal grants or paid from a fund that sustains itself through its operations, leaving roughly $2,185,617 to be paid from county property tax dollars, according to figures provided by the Washington County controller’s office. The vast majority of Washington County retirees receive annual pensions of less than $40,000.
“Money from gas and oil is helping us maintain our growth in the county, helping us increase our infrastructure,” Maggi said.
When Washington County Finance Director Roger Metcalfe was asked to account for increases in the county budget over the past seven years, he chose a dozen categories that showed significant increases adding up to approximately $20 million. Health insurance was one of those categories, which nearly doubled from $4,460,475 to $8,873,414.
It was second only to the increased cost of the Children and Youth Services department over the seven-year period.
“There’s a good deal of county dollars invested in the Children and Youth program,” Metcalfe said.
Asked about specific increases in the CYS budget, the hike is due basically, Metcalfe said, to the increased cost of placing dependent children.
Reasons behind increases in other general fund budgetary categories include the rising cost of housing delinquents, which accounts for about $5 million worth of hikes in the juvenile probation office budget over the seven-year period. The increase in the district judges’ budget was due mainly to landlords raising the costs of renting office space.
“Increases in a lot of things are beyond our control,” said Commission Chairman Larry Maggi. “It’s a constant fight. With health insurance, it’s a shame when it goes up 10 percent, but we’re glad it didn’t go up 16 percent.”
Maggi also pointed to the 2014 cost of countywide reassessment, budgeted at $3 million, a category that did not exist in the 2007 budget, and labor contract arbitration awards that the commissioners must accept. The jail, the courts and probation offices have mandates that require certain staffing levels. More people and more business unfortunately results in increase in litigation in county courts.
The posted budget is made available in the commissioners’ office so members of the can review, and this budget typically does not change between posting and adoption.
There will be no tax increase for 2014, so the county levy will stands at 24.9. It had been 3.5 mills less than that between 2004 and 2009. In 2010, the year of the county’s most recent tax increase, the owner of a home worth $200,000 saw an increase of $66 in county taxes.
Greene budget also up
In the last five years, budget expenditures in Greene County have climbed approximately 25 percent, not so unexpected considering the increases in employee wages, benefits, health insurance premiums and general inflationary trends.
The spending package adopted for 2010 was $14.1 million. The proposed budget for 2014 is $17.7 million, which reflects a $1.95 million increase for the 2013 budget. Next year’s budget includes the projected impact fee payment of $1.5 million in July, while the 2013 budget contained about $1.1 million from Act 13 funds.
But perhaps no budget was as difficult to pass as the one for 2010, recalled Pam Snyder, a former county commissioner and now the state representative from the 50th District.
“We were going to be hit by four big punches – higher costs for employee pensions and health insurance and lower revenue through state subsidies and coal taxes, “she said. “Those four items put us down $1 million right off the bat, and those are things that we didn’t have any control over.”
Snyder also remembered that the taxpayers felt some pain in the form of a 1.22-mill property tax.
As a member of the board of commissioners that adopted the 2010 budget, Snyder said the county’s health insurance premium and pension contribution jumped by more than 40 percent to about $1.5 million for health insurance and $500,000 for retirement.
“The state decreased subsidies and grants to all counties due to its own budget problems,” she said. “The value of coal also dropped because of the sluggish economy, which meant the county collected less in tax revenue through that mineral. Yes, that was a really tough budget year.”
Comparatively, the 2011 budget was $15 million; 2012, $14.75 million; and 2013, $15.7 million.
‘The impact fees have obviously helped,” Snyder said. “And while I was commissioner I think Greene County stayed relatively consistent when it camee to spending.”