Wvw Swimmers Off To Fast Start, Trounce Hazleton

Advertising Employee Is Times Leader's '94 Best

By MITCH MORRISON; Times Leader Staff Writer
 Tuesday, December 13, 1994 &nbsp;&nbsp;&nbsp;&nbsp;Page: 3A 





WILKES-BARRE -- The bills piled up as the county scoured for cash. &nbsp;&nbsp;&nbsp; 
 The county treasurer plunked billions of taxpayer dollars in high-risk
securities, junk bonds and overseas investments. &nbsp;&nbsp;&nbsp; And lost. &nbsp;&nbsp;&nbsp; 
 Today, Orange County, Calif. -- a multibillion dollar operation with one of
the most affluent populations in America -- is bankrupt. &nbsp;&nbsp;&nbsp; 
 Unlike California, Pennsylvania law allows only relatively safe
investments. That means Luzerne County officials can't blow the tens of
millions of dollars in public money they handle each year. &nbsp;&nbsp;&nbsp; 
 "Our bond adviser called us because some of the investors were a little
skittish," said Tom Dugan, Luzerne County's deputy controller. "We had to
assure them everything was fine." &nbsp;&nbsp;&nbsp; 
 Dugan's investment options are limited. The law says the county can't buy
stocks, most mutual funds, junk bonds or other speculative ventures that can
yield huge windfalls or crippling losses. &nbsp;&nbsp;&nbsp; 
 Only savings accounts, certificates of deposit, U.S. Treasury notes and
federal bonds are allowed. &nbsp;&nbsp;&nbsp; 
 "We're not going to be like Orange County," Dugan said Monday. "We only go
with CDs. Nothing risky like mutual funds." &nbsp;&nbsp;&nbsp; 
 During 1994, Luzerne County will have invested more than $20 million in
short-term CDs: two-week, one-month, two-month and three-month certificates. &nbsp;&nbsp;&nbsp; 
 "We don't want to put our money in long-term investments because the rates
fluctuate so much," Dugan said. &nbsp;&nbsp;&nbsp; 
 The money is spread among the area's many banks -- Franklin First Federal,
PNC, Luzerne National Bank, whoever offers the best interest rate at the time.
Right now, the county has almost $9 million spread over approximately 20 CDs.
Franklin First Federal holds most of it. &nbsp;&nbsp;&nbsp; 
 "They seem to offer a better rate than everyone else," Dugan said. "The
banks more or less bid on our money. We give it to the highest bidder. &nbsp;&nbsp;&nbsp; 
 "We're in the business of making money without putting the taxpayers at
risk." &nbsp;&nbsp;&nbsp; 
 In 1993, the county earned nearly $545,000 in interest -- the equivalent of
nearly one mill in tax revenue. Property taxes accounted for most of the
county's $67 million in revenue last year. &nbsp;&nbsp;&nbsp; 
 Sound investments don't guarantee a sound budget, though. &nbsp;&nbsp;&nbsp; 
 "We have many municipalities that are financially distressed," said Charles
Hoffman, chief of municipal statistics for the state Department of Community
Affairs. &nbsp;&nbsp;&nbsp; 
 "But that's usually because of a falling tax base or mismanagement -- not
reducing expenditures when revenues decline. &nbsp;&nbsp;&nbsp; 
 "Municipalities and counties can get into financial difficulties," Hoffman
added. "But in Pennsylvania, it won't be because of investment policies." &nbsp;&nbsp;&nbsp;

Orange County Scare You? Same Risks Aren't Taken Here 
Under State Law, Luzerne County Officials Can't Do 
What They Please With 
Public Money, And Investment 
Options Are Limited

Orange County Scare You? Same Risks Aren't Taken Here Under State Law, Luzerne County Officials Can't Do What They Please With Public Money, And Investment Options Are Limited