Beaver County’s annual financial report released last week shows county government ended its 2018 fiscal year $9.7 million in the black. The positive general fund balance is in stark contrast to its position just three years earlier, when audits showed the county had an ending cash balance of -$6 million.
County Controller David Rossi credits the dramatic swing to tax increases and bond refinancing by county commissioners, and pension fund credits the county is still enjoying from the sale of Friendship Ridge.
“This is a good thing,” Rossi said. “When my office pulled the alarm in 2016 and warned about large projected deficits ahead, a lot of positive decisions were made by commissioners that got us to this point.”
Rossi said the county saw additional revenues of roughly $7.5 million per year for the past two years as a result of a 17% property tax increase passed by the board at the end of 2016. A refinancing of the county’s bonds led to approximately $11 million less in debt service payments since 2016, although a downgrading of the county’s credit rating from A- to BBB+ resulted in about $1 million less in savings than should have been realized.
The county has also been experiencing temporary savings in pension fund payments, due to actuarial changes that followed the sale of the county-owned Friendship Ridge nursing home in 2014.
“Last year, the general fund’s payment to the pension fund should have been $1.7 million,” Rossi said. “But the county got a $1.9 million credit from the actuary because we no longer have the Friendship Ridge employees. … That credit will go away in the next year or two.”
Rossi told BeaverCountian.com the temporary savings from the bond refinancing will also be going away in a big way starting next year, with payments increasing by $900,000 in 2020, and an additional $400,000 on top of that in 2021.
“This is the high watermark of revenue exceeding expenses,” Rossi said. “You can foresee in the next couple of years there are more challenges, and expenses are soon going to be outweighing revenues again without additional tax increases or major cuts to spending.”
The county’s general fund currently pays out about $27.5 million in salaries a year, a number that increases by about $1.2 million each year on average as a result of contracted raises, according to Rossi. An additional $10 million is spent each year on employee benefits, a number that goes up roughly $1 million anually.
The county only sees additional revenues of about 1% a year from property taxes as a result of new construction, which amounts to just $500,000 annually, said Rossi.
The county’s finances have been more difficult to track since March 2018, when Commissioners Tony Amadio and Dan Camp voted to fire then-financial administrator Ricardo Luckow and ousted Commissioner Sandie Egley as Chair.
The county now outsources the position of financial administrator to an accounting firm in Harrisburg. While Luckow gave weekly public briefings on the county’s finances, only a handful of similar discussions have taken place in public since his replacement.
Rossi said his Comprehensive Annual Financial Report (CAFR) is based on actual revenues and expenses that have posted to county accounts. Expenses and liabilities that may be known by the Board but not planned for in the county’s budget could drastically shift his future projections.
In January 2016, Luckow sounded a public alarm revealing the prior Board of Commissioners had issued nearly $6.91 million in bad checks at the end of 2015, and passed a budget for 2016 that hadn’t accounted for roughly $17 million in expenses.
The county budget was subsequently reopened by newly elected Commissioners Sandie Egley and Dan Camp, who slashed millions in spending. Commissioner Tony Amadio continues to publicly deny the county had ever written bad checks or that the original 2016 budget he passed along with then-Commissioner Dennis Nichols contained large cash flow deficits.