SCRANTON, Pa. — Lackawanna County introduced plans Wednesday to borrow $11 million to make sure the government has enough money to pay its bills through the end of the year.
The deal, which uses the county Redevelopment Authority as a pass-through, is expected to come up before the county commissioners for a final vote later this month. If passed, it should be completed in November, officials said.
Details of the transaction were presented to the commissioners Wednesday by the county’s chief financial officer and a representative of PFM Group, a consulting firm the hired to help the government navigate its cash crunch.
For as complex as borrowing can be, CFO David Bulzoni said this deal involves “a degree of simplicity.”
“If we don’t do the transaction, we run out of money,” he said.
Lackawanna County’s government entered the year with $6 million in its general fund and $18.5 million in unpaid bills carried over from the previous year.
To get a handle on this year’s expenses, PFM has recommended the county enact a hiring freeze, cease discretionary spending and use American Rescue Plan Act funds.
In June, the county restructured millions more in debt using a transaction called a “scoop-and-toss,” which Bulzoni explained at the time involves issuing new debt to cover existing debt service.
The borrowing proposed Wednesday helps cover what PFM has called an unbudgeted 13th month of expenses that new Commissioners Bill Gaughan and Matt McGloin inherited from last year’s unpaid bills.
The loan would be paid back over 10 years, officials said. It allows up to $12 million in borrowing, though officials said $11 million is likely what is needed.
“Are we correct in saying that due to the financial crisis in the county we don’t have a choice?” Gaughan asked Bulzoni.
Bulzoni repeated the county could run out of money if it does not borrow.
“I think it’s important to advance this as part of the overall consideration to get us to the other side,” Bulzoni said.
The county’s immediate cash problems come against a backdrop of long-term issues, driven, officials say, by weak revenue and soaring expenses. At a commissioner’s meeting last month, Gaughan warned that the county could enter 2025 with a structural deficit as high as $25 million.
PFM is expected to present a long-term projection of the county’s finances at a meeting Thursday at the Lackawanna County Government Center.
