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<p>The elimination of Luzerne County&#8217;s property tax Homestead exemption for 2015 was the single biggest factor in the county ending the year with a nearly $7.6 million surplus, according to a finalized audit for 2015.</p><p>County Manager C. David Pedri, who released a draft audit to the county council prior to Wednesday&#8217;s council meeting and work session, sat down with Budget/Finance Division Head Brian Swetz, council Chairwoman Linda McClosky Houck and members of the media on Thursday to go over details of the audit, which was finalized earlier in the day.</p><p>It&#8217;s the first time the county ended the year with a general fund surplus since 2011, the audit notes. The actual surplus was $7,579,377.</p><p>Some of the increased revenue sources or savings that contributed most to the surplus, as pointed out by Pedri and Swetz, include:</p><p>&#8226; About $5.2 million in additional real estate (property) taxes compared to 2014&#8217;s tax revenues &#8212; $4.7 million of which came from eliminating the $57 Homestead exemption tax break for 86,300 owner-occupied residences for three years, and another $542,000 from an increase in delinquent tax collections.</p><p>&#8226; About $4 million in savings on debt service because of the May 2015 refinancing of bonds, which switched the terms of most outstanding loans from variable to fixed interest rates.</p><p>&#8226; About $2.1 million from the sale of the Springbrook building and former Valley Crest nursing home properties.</p><p><strong>Additional savings</strong></p><p>A combination of factors played into additional savings, both Pedri and McClosky Houck said.</p><p>&#8220;Every county manager and division head was charged with reviewing their budgets. Every budget transfer was scrutinized, always making sure we were living within our means,&#8221; Pedri said.</p><p>McClosky Houck added that several money-saving or revenue-boosting decisions came through narrow majority votes by the council. The votes to suspend the Homestead exemption and refinance the bonds were both 6-5.</p><p>Pedri said the council and administration working together has shown &#8220;good planning and good fiscal management.&#8221;</p><p>He also noted that the audit shows that the running county deficit decreased from $16.9 million at the end of 2014 to $9.4 million by the end of 2015, and the county&#8217;s total debt decreased from $421 million at the end of 2011 to $351 million by the end of 2015. &#8220;Paying down (nearly) $100 million in debt on four years is something to be proud of,&#8221; Pedri said.</p><p><strong>Negative impacts</strong></p><p>The officials also explained some of the negative impacts on the bottom line, such as:</p><p>&#8226; Collecting approximately $500,000 less in delinquent taxes than budgeted.</p><p>&#8226; Corrections Department spending coming in $1.5 million over budget because of health insurance premiums costing about $420,000 more than expected and the cost of matching employee retirement contributions being about $630,000 more than anticipated.</p><p>&#8226; Expenditures for the courts costing $800,000 more than budgeted because of retirement contribution increases.</p><p><strong>Positive outlook</strong></p><p>Pedri said he expects the county will be in a position to see its credit rating returned to investment grade by the summer of 2017, which will allow the county to refinance its bonds again to save even more on debt service, if it continues the level of progress this year that it did in 2015.</p><p>He said the on-time, unqualified audit, which showed a substantial surplus, was a &#8220;major step&#8221; toward a credit rating upgrade. The other things that need to occur for the credit rating upgrade, he said, include:</p><p>&#8226; Adopting a 2017 budget that is balanced and &#8220;shows stability and growth.&#8221;</p><p>&#8226; Producing an on-time, unqualified audit for 2016 that shows a surplus at the end of the year.</p><p>&#8226; Following the five-year plan put together by the county&#8217;s financial adviser, PFM.</p><p>Pedri said it&#8217;s too soon to predict whether an increase in taxes or any additional downsizing in the workforce will be recommended for 2017.</p><p>&#8220;County management will present (a proposed 2017) budget to council in October. We began work on it today. The 2017 budget season has begun,&#8221; Pedri said.</p><p>&#8220;We&#8217;ll look at our debt service, actual numbers for personnel, what we can do as far as services for our citizens and how much we can pay for those services. Our personnel services have been cut extremely close to the bone,&#8221; Pedri said. &#8220;The question is, how do we right-size this government and how do we put the right people into those positions?&#8221;</p><style>
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<div class="neFile"><img class="neImage" src="https://www.timesleader.com/wp-content/uploads/2016/06/web1_Pedri-David_toned-1.jpg">
<div class="neCaption">Pedri </div></div><div class="metaInfo"><photo0>https://www.timesleader.com/wp-content/uploads/2016/06/web1_Pedri-David_toned-1.jpg</photo0><caption0>Pedri </caption0><photoCredit0></photoCredit0></div><div class="neFile"><img class="neImage" src="https://www.timesleader.com/wp-content/uploads/2016/06/web1_swetz_Brian-cmyk.jpg">
<div class="neCaption">Swetz </div></div><div class="metaInfo"><photo1>https://www.timesleader.com/wp-content/uploads/2016/06/web1_swetz_Brian-cmyk.jpg</photo1><caption1>Swetz </caption1><photoCredit1></photoCredit1></div><div class="neFile"><img class="neImage" src="https://www.timesleader.com/wp-content/uploads/2016/06/web1_McClosky_Houck_use-cmyk-2.jpg">
<div class="neCaption">McClosky Houck </div></div><div class="metaInfo"><photo2>https://www.timesleader.com/wp-content/uploads/2016/06/web1_McClosky_Houck_use-cmyk-2.jpg</photo2><caption2>McClosky Houck </caption2><photoCredit2></photoCredit2></div></div>
<div class="metaInfo"><bylineMeta><p>By Steve Mocarsky</p><p>smocarsky@www.timesleader.com</p></bylineMeta></div><div class="metaInfo"><shirttailMeta><p>Reach Steve Mocarsky at 570-991-6386 or on Twitter @TLSteveMocarsky.</p></shirttailMeta></div>

Audit: Controversial votes helped Luzerne County’s finances the most in 2015