SCRANTON – City Council continued to blast the administration on Tuesday for shortfalls in the 2011 budget, alleging that they have “never been truthful” about city finances and that tax anticipation notes for 2011 were used to cover up holes in 2010’s budget.
Councilman Frank Joyce, council’s finance chairman, said at previous meetings that the at least $11.3 hole in the 2011 budget comes from $5 million borrowed from the workers’ compensation trust fund in 2010 to pay salaries, paid back in 2011 with tax anticipation notes, and $6.3 million deficit in accounts payable, spent on 2010 bills, has occurred.
On Tuesday, he further detailed borrowing concerns.
“Basically, what the city did was take out a loan in 2011 to pay off a 2010 loan that it didn’t have the money to pay for,” Joyce said.
“Because the city ran out of money in 2010 and could not make the payment on TAN B in December, the city waited until January to pay 2010 TANs A and B for 2011 which were to be used on 2011 expenditures until tax revenue arrives. This is the real reason we’re running out of cash, not (council’s) 2011 operating budget.”
Council solicitor Boyd Hughes and Council President Janet Evans said that this is in violation of File of Council 115 of 2009, Section 9.
“With money received from a 2011 TAN pursuant to this ordinance, unless it was put in the budget, cannot be paid,” Hughes said, adding that it may also be in violation of state law.
“Irregardless of what’s required in the state law,” Hughes continued, “it states in the city’s ordinance for this year’s tax anticipation note in article nine that none of those monies can be used to pay off last year’s tax anticipation notes unless it was put in the budget.”
Joyce noted that revenue coming into city is higher this year, according to reports from the Single Tax Office, so council’s 2011 tax decrease is not to blame for the budget shortfall. Council passed a 10.55 percent reduction in real estate taxes and a 25 percent reduction in business privilege and mercantile taxes in the 2011 budget, overriding the mayor’s veto of the legislation.
“If a shortfall occurs in 2011, it will be primarily due to the administration’s under-projection of health insurance costs coupled with the fact that the administration chose to hire back workers that were eliminated in council’s budget amendments, creating a hole in other salary accounts,” Joyce said.
Councilman Bob McGoff said that regardless of who is responsible for shortfalls in the budget, they must work together to solve the issue before rumored layoffs of police, fire, clerical, and Department of Public Works employees are necessary.
“We as a council and the administration need to work together on this. This isn’t about being right,” McGoff said. “I think there is some resolution that we can come to without people losing their jobs.
“Rumors of massive layoffs can become a reality. We can’t allow that to happen.”
Evans agreed, but said that it’s not about being right, “it’s about being truthful.” She said the administration has played a “shell game” with millions of dollars, and council was “shunned” previously by the administration when they tried to work with them.
“It’s very difficult now after they caused a financial train wreck to sit down with people who do not tell the truth,” Evans said. “Budgets have become a joke now.”
Business Administrator Ryan McGowan did not return several requests for comment.