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WILKES-BARRE &mdash; Teri Ooms, executive director of The Institute for Public Policy and Economic Development at Wilkes University, this week said the significant economic impacts of the pandemic will also affect local governments this fiscal year.
				Ooms said The Institute recently published a study on municipal fiscal impacts, with an emphasis on the six second-class and third-class cities in Luzerne and Lackawanna counties.
				&ldquo;One important finding is that a municipality&rsquo;s relatively level of risk is linked to how much of its tax revenue is elastic versus inelastic,&rdquo; Ooms said. &ldquo;In this context, elastic taxes are those that we would expect to be immediately impacted by business closures or unemployment &mdash; earned income taxes, business taxes, and amusement taxes, for example. Property taxes are an inelastic tax, since any impact of COVID-19 on the real estate market are less immediate.&rdquo;
				Ooms discussed the findings that are part of The Institute&rsquo;s 2020 Indicators Report.
				According to Andrew Chew The Institute&rsquo;s Senior Research & Policy Analyst, the government section o0f the Indicators report deals primarily with county government fiscal affairs.
				Chew said tables consist of county and state data such as revenue, expenditures, debt, taxes, and aid to communities. He said the indicators reflect governmental size, scope, and financial health.
				Sources of information include the Pennsylvania Department of Community and Economic Development and data procured directly from the two counties&rsquo; annual financial reports, which are filed with DCED.
				Chew said an updated financial report for Lackawanna County was not available in time for inclusion in this year&rsquo;s report,
				&ldquo;We also used two different sets of assumptions about unemployment levels to get an idea of the order of magnitude of the financial impact,&rdquo; Chew said. &ldquo;We found that among earned income tax alone, which is one of the most important revenue sources for municipalities in Pennsylvania, we&rsquo;d expect a drop-off in revenue from 10 to 28 percent per month during the shutdown.&rdquo;
				Chew added, &ldquo;If we apply these results to the approximately 10 weeks during which most businesses were closed, the EIT revenue loss of 3.5 to 4.5 percent during that time period alone, not accounting for the reduced revenues that will likely be seen for months ahead as the labor market gradually recovers.&rdquo;
				Ooms said the statistics presented are government-wide, meaning that the data is inclusive of each county&rsquo;s component parts. They also contain details from each county&rsquo;s general fund as well as all other major and minor funds for which the county is responsible.
				Lackawanna County fiscal snapshot
				Ooms said no new data for 2018 was available for Lackawanna County in time for publication in this year&rsquo;s report. In 2017, the county&rsquo;s total revenues exceeded $177 million &#8211; an increase of approximately three percent from 2016. Expenditures grew by seven percent, and for the first time in recent years, expenditures exceeded revenue. Lackawanna County&rsquo;s long-term debt fell by just under $3 million from 2016 to 2017, continuing a declining trend since debt peaked in 2011. The total has fallen by 11 percent.
				Ooms and Chew said county revenue consists primarily of taxes and inter-governmental funds. Inter-governmental funds come from federal, state, and local sources. They include grants, reimbursements for services, and the like.
				The majority of intergovernmental funds received by both counties support health and human services. Tax revenue, on the other hand, includes all taxes levied by the county government (predominantly property taxes).
				In Lackawanna County, inter-governmental revenue increased by 1.7 percent between 2016 and 2017, following a more dramatic growth in the prior year. Tax revenue grew by just over four percent from 2016 to 2017. The greatest spike in tax revenue, however, came between 2011 and 2012.
				This coincides with a 15.002 mill increase in the county&rsquo;s property tax rate. Revenues per capita, expenditures per capita, and taxes per capita increased from 2016 to 2017 in Lackawanna County, keeping with prior year trends.
				Luzerne County fiscal snapshot
				In 2018, Ooms and Chew said Luzerne County&rsquo;s total revenues surpassed $240.7 million &mdash; a small decline from the previous year, but still considerably higher than any year prior to 2017. It represents a 0.6 percent decrease in total revenue compared with the prior year, but a growth of nearly 37 percent from the ten-year low seen in 2011 (before adjusting for inflation). Expenditures totaled over $232 million &#8211; four percent higher than the prior year. County expenditures amounted to 96.6 percent of total revenue.
				Luzerne County&rsquo;s inter-governmental revenue (which includes transfers from other federal, state, and local sources such as grants and reimbursements for services) has increased slowly since 2016, following years of larger fluctuations.
				The $99 million in inter-governmental revenue from 2018 was the highest total among years analyzed. The majority of inter-governmental funds received by both counties support health and human services. Tax revenue for the county increased slightly as well, from $120.7 million to $121.2 million &#8211; also the highest total among years analyzed. Tab 1
				&ldquo;Luzerne County has experienced a generally declining trend in long-term debt,&rdquo; Chew said. &ldquo;Most recently, total debt has fallen by 9.5 percent from the prior year and is down 27 percent compared with 2009, when county debt reached a peak of $318 million.&rdquo; Tab 2
				Property tax rates
				In 2020, Ooms and Chew said total property tax rates in both counties remain unchanged compared with those of the last several years, though Lackawanna County&rsquo;s millages shifted with a reduction in the general purpose real estate tax and an equivalent increase in the debt service millage.
				Lackawanna County&rsquo;s property tax rate is significantly higher than Luzerne County&rsquo;s rate.
				&ldquo;For several reasons, however, this does not necessarily reflect actual property tax costs incurred by property owners,&rdquo; Ooms said. &ldquo;First, there are differences in how and when properties in the two counties were assessed. This means the two counties&rsquo; ratios of assessed value for tax purposes to actual market value are different. Furthermore, tax rates included in this report do not include school taxes, which typically comprise the largest portions of all property owners&rsquo; tax bills.&rdquo;
				Sales tax
				The report shows that sales tax remittance in both counties and statewide has grown in each of the past two years.
				From the 2016-2017 to 2017-2018 years, Lackawanna and Luzerne Counties saw sales tax remittance grow by 9.2 and 0.9 percent, respectively.
				From 2017-2018 to the most recent data, Lackawanna County&rsquo;s remittance grew by another 5.3 percent, and Luzerne County&rsquo;s grew by 2.1 percent.
				The commonwealth as a whole saw nearly seven percent year-over-year growth most recently.
				&ldquo;In 2018-2019, the total regional tax remittance stood at $164 million, 1.5 percent of the statewide total,&rdquo; Chew said.
				Community investment
				Ooms and Chew said the report shows investment from selected grant and tax credit programs offered through the Pennsylvania Department of Community and Economic Development (DCED), though no new data was available for inclusion in this year&rsquo;s Indicators report.
				Among the three programs analyzed, Lackawanna County received investment exceeding $4 million in calendar year 2018. Luzerne County totaled $14.5 million in investment.
				The largest portion of this investment comes from the Local Share Account (LSA) program, which distributes revenues from the Mt. Airy Casino Resort and Mohegan Sun Pocono casinos to local projects. Projects funded locally under the LSA program include road repairs, trail construction, disaster recovery, and buildings, vehicles, and equipment for municipal governments.
				For all years analyzed, Luzerne County (which hosts a casino) has received substantially more LSA funding than Lackawanna County, whose LSA funding is tied to Mt. Airy Casino in Monroe County. In both counties, LSA project funding declined compared with previous years.
				Both counties experienced increases in KIZ tax credits relative to past years, totaling over $3.3 million for the region. The Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) incentivize businesses to support educational programs. Lackawanna and Luzerne Counties experienced diminished investment in this category, totaling $165,200 in 2018. Tab 5
				&ldquo;The Institute is working on aggressive research agenda called The Institute Insights on COVID-19,&rdquo; Ooms said. &ldquo;One of the studies looks at the impact on municipal government finances.&rdquo;

Report: Economic impacts of pandemic will affect local governments