News for Veterans

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Kyleigh J. Metzgar

<p>The math isn&#8217;t adding up regarding Luzerne County&#8217;s outstanding debt.</p><p>The county paid $24.2 million toward debt last year, leaving the expectation the grand total would decrease by that amount.</p><p>However, the recently issued 2015 audit shows the county owed a total $351 million in principal and interest at the end of last year &#8212; an increase of $4.47 million compared to the prior year audit.</p><p>The increase becomes more puzzling because the county completed a massive debt restructuring last year that wasn&#8217;t supposed to add to the bottom line.</p><p>Former county county manager Robert Lawton had announced in May 2015 that the restructuring package would save $4 million in 2015 and reduce the county&#8217;s outstanding debt by $10,176 instead of increasing it as expected.</p><p>Councilwoman Eileen Sorokas has presented the conflicting numbers to the administration and her council colleagues.</p><p>&#8220;Numbers can be played with really easy, and that bothers me,&#8221; Sorokas said Friday.</p><p>County Budget/Finance Division Head Brian Swetz reviewed the audits and debt spending Friday and reached two conclusions:</p><p>&#8226; The total outstanding debt projections in the 2014 audit didn&#8217;t factor in all the interest owed on variable-rate debt, which made up about 40 percent of the portfolio. The effect: the overall tally was too low, Swetz said. The audit noted this disclaimer in a paragraph preceding the outstanding debt figures.</p><p>This isn&#8217;t an issue with the 2015 figures because the debt restructuring converted all but 4.7 percent of the outstanding debt to a fixed rate, Swetz said.</p><p>&#8226; The county was forced to incorporate a $16.2 million early termination fee and other closing costs into future-year payments when the debt was restructured, Swetz said.</p><p>The county could not afford to pay these expenses up front in addition to the $24.2 million annual debt repayment, Swetz said.</p><p>The impact of the early termination fee and other costs was not made clear in Lawton&#8217;s May 2015 announcement.</p><p>Sorokas said she&#8217;s not attacking the decision to restructure about $110 million in debt, which extracted the county from an inherited 2006 bond containing spiraling fees.</p><p>&#8220;I just want to make sure the figures we&#8217;re presenting to the public are accurate,&#8221; she said.</p><p>Swetz provided evidence Friday that audit projections are not set in stone if they are heavy on variable-rate borrowing.</p><p>The county&#8217;s 2013 audit valued the outstanding debt at $371.7 million the end of that year and contained an estimate the debt repayment for 2014 would be $25.2 million.</p><p>The actual total payment required for 2014, due to the variable-rate debt: $28 million, Swetz said.</p><p>Swetz said he&#8217;s confident the audit projection going forward will be accurate because most of the interest rates are predictable.</p><p>The county is budgeted to pay $26 million toward the debt this year, which should reduce the overall debt to around $325 million for the start of 2017.</p><p>According to the 2015 audit, the county&#8217;s $351 million in debt is scheduled to be paid in 2030. The refinancing extended the repayments previously set to end in 2027, the audit said.</p><style>
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<div class="neFile"><img class="neImage" src="https://www.timesleader.com/wp-content/uploads/2016/07/web1_swetz_Brian-cmyk-1.jpg">
<div class="neCaption">Swetz </div></div><div class="metaInfo"><photo0>https://www.timesleader.com/wp-content/uploads/2016/07/web1_swetz_Brian-cmyk-1.jpg</photo0><caption0>Swetz </caption0><photoCredit0></photoCredit0></div></div>
<div class="metaInfo"><bylineMeta><p>By Jennifer Learn-Andes</p><p>jandes@www.timesleader.com</p></bylineMeta></div><div class="metaInfo"><shirttailMeta><p>Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.</p></shirttailMeta></div>

Luzerne County shows conflicting figures on outstanding debt