It’s something Cambria County Controller Ed Cernic Jr. said he’s been worried about since the beginning of the budget year: county funds drying up while sizable bills remain unpaid through 2013.
It’s something he said he’s warned the Cambria County commissioners about, but that his pleas “fell on deaf ears.”
Now, correspondence from the controller’s office sent out to county agencies and departments warns of appropriations that will be skipped from October through the end of the year.
“I’ve been telling the commissioners about this situtation all year long, since they developed their budget last year. I told them they had a budget that wouldn’t work, wouldn’t handle government operations and could cause default,” Cernic said.
“The numbers in their budget couldn’t be achieved. I gave them the specifics on that and they chose to ignore it.”
Cernic said around $680,000 in appropriations is still owed to county authorities this year.
That’s not counting two large loans still due at the beginning and end of December and the other half of the $10 million tax anticipation loan that’s due by Dec. 31.
He recommended in his correspondence that departments should act as if they will not be receiving funds for payments that are due in November or December.
“We are out of actual cash on hand earlier than at any point in the past,” Cernic told The Tribune-Democrat on Tuesday.
But President Commissioner Douglas Lengenfelder said there’s a difference between emptying the general fund and spending all available dollars.
“There’s some leeway in terms of how you move end-of-year dollars to temporarily meet needs,” he said.
Cernic said the county took out a $200,000 loan from the Area Agency on Aging on Wednesday, leaving the organization with around $1.3 million to make its bills this week.
He also said the budget shortfall could affect the county’s ability to make payroll, which is around $1.2 million every two weeks. That money would need to be in place by the third week of December.
“Last year, we depleted all available county cash in all agencies to make the final payroll and loan payments, and we are running behind in receipts this year from where we were last year,” he said.
Although Cernic said payroll payments are always handled as a top priority, unsettled loan obligations near the end of the year could put the county in “jeopardy” of not being able to make payments such as the other $5 million of the tax anticipation loan. Cernic said the first half is usually paid by May or June, saving the county around $40,000 in interest.
He said defaulting is a “non-option.”
“If we would happen to default on that, it puts us into a situation where we cannot get a new tax anticipation note (for 2014),” he said. “Which would prohibit us from making the payments of payroll at the beginning of January, and also the loan obligations that we have.”
Although Cernic said the county faces a “rough road” through the end of the year, Lengenfelder said he feels the county has been very fiscally responsible this year and “good stewards of taxpayer dollars.”
“Just like last year at this time, Mr. Cernic started saying he’s very concerned we weren’t going to be able to meet our bills. This year, he's saying the same things. We understand his concern and we’re taking a very hard look at it,” he said, adding that budget planning for next year already has begun.
“This problem was created over many years. This will be a problem for the four years these commissioners are in office. But we’re attacking it from what I would call as reasonable and systematic of an approach as you can.”
Lengenfelder said the current commissioners came into office $6 million to $7 million behind, which causes the end of each fiscal year to lag. He also said ending last year $50,000 in the black indicates they’re “doing something right.”
The 2013 budget slashed at least 4.75 percent from all county departments, but Lengenfelder said 25 percent pay raises for county employees, which was pushed through near the end of the previous commissioners’ terms, could account for a good share of the current budget problems.
“Obviously, you’re talking hundreds of thousands of dollars here. Over these five years, you’re talking millions,” he said.
“That has a huge impact. ... By law, it’s not something that these three commissioners can change. We talked to the unions about it and discussed the huge impacts it is having on our budget, but it is the law.”
By mid-October, Lengenfelder said, commissioners should have a clearer picture of end-of-year revenue amounts and bills. He said many departments regularly pitch in when the county is in a bind, offering to leave vacated positions open for weeks at a time.
“(This) saves the county that pay, but also saves on the tail end in terms of benefits,” he said. “All of these things add up.”
Commissioner Tom Chernisky said he applauds all the county department heads who continue to do more with less. Chernisky voted against the 2013 budget, favoring examinations of department budgets on an individual basis over across-the-board cuts, but said the county has weathered this end-of-the-year budget scramble before.
“We quit paying some bills, quit paying some vendors and we hit payroll,” he said. “It’s nothing new, but it should be concerning and alarming. ... Ed has got us through this time of year every year.”
“How the county got in this situation didn’t happen overnight. To fix it won’t happen overnight, either.”
Justin Dennis is a multimedia reporter for The Tribune-Democrat. Follow him on Twitter at www.Twitter.com/ JustinDennis.