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Counties still smarting from last Pa. budget mess fret yet again

Counties are still recovering from the state budget impasse two years ago. Some are paying back loans and the interest they've accrued.

Members of the Pennsylvania House of Representatives debated during the budget impasse two years ago in Harrisburg.
Members of the Pennsylvania House of Representatives debated during the budget impasse two years ago in Harrisburg.Read moreMatt Rourke

During the last Pennsylvania budget impasse, the Crime Victims' Center of Chester County was on the verge of closing after more than 40 years.

Then an unidentified woman who had read about the plight of the agency, which provides counseling for sexual-assault and other crime victims and their families, offered a six-figure, no-interest loan.

"She single-handedly kept our doors open until the state figured something out," said Ken Hutton, interim executive director, who said his agency in West Chester receives more than half its funding from the state via the county and is "constantly struggling." It just recently finished paying off that loan.

But just as two years ago, his and other agencies across the commonwealth once again worry that they, themselves, will be victims, caught in the cross fire of the legislature's dispute over how Pennsylvania should pay its $32 billion in bills.

The Republican-led state Senate last week rejected a Republican-led House plan that would have expanded legalized gaming, raided the state's tobacco-industry settlement, and look to other funds to plug a $2.2 billion gap in the spending plan it approved June 30. County officials worry legislators will use funds already dedicated for services. Gov. Wolf, a Democrat, has said the state would not be able to make regular Medicaid payments to insurers.

And in recent days, Standard & Poor's downgraded Pennsylvania's bond rating, making it more costly for the state to borrow money. The agency cited the state's penchant for one-time budget fixes instead of long-term solutions during the last decade.

Counties still are recovering from the state budget impasse of 2015. Some are paying back loans and the interest they have accrued, and others  — including wealthy Montgomery County — are trying to build back reserves they had to tap two years ago.

"Counties have not been able to easily replenish those reserves, if they had them," said Douglas Hill, executive director of the County Commissioners Association of Pennsylvania.

Montgomery County, which receives about half of its general-fund revenues from state and federal sources, worries about a 2015 repeat, said Valerie Arkoosh, chair of the board of commissioners. "Had the state not resolved the impact by the end of the year, we would have had to start borrowing money," she said.

And Montgomery, along with Philadelphia's other collar counties, is far better situated than most. Counties rely heavily on real estate taxes, and they are among the most property-rich in the state. Montgomery's total value, $83 billion, is the highest in Pennsylvania, according to state figures.

On average, counties put up about $12 million of their own money to keep themselves going during the budget impasse of 2015, according to a survey of 46 of Pennsylvania's 67 counties by the County Commissioners Association of Pennsylvania.

Rural Huntingdon County, in central Pennsylvania, still is paying back loans it took out during the last impasse, when the county was "in dire need of funds," said Bobbi Jo Gearhart, deputy treasurer.

The county operates on a $20 million annual budget, and has roughly $2 million left to pay on 2015 loans. Officials make monthly payments because they need cash on hand to keep the county running.

"We're already working with the bare minimum we can work with right now," Gearhart said

Last year, county officials increased the yearly tax anticipation note — money to get it through until state funds become available — from $1 million to $1.5 million in an effort to prevent future borrowing.

By drawing down funds that would have accrued interest, counties also lost out on interest payments. Those lost funds totaled about $60,000 in Berks County and close to $100,000 in Bucks County, officials said. Other counties across the state are in the same situation.

Vendors also have felt the impact. Because of a budget morass in 2009, Berks County put clauses in its contracts with vendors that if federal and state money is involved, "if we're not paid, we don't pay vendors," said Christian Leinbach, a county commissioner.

"We had some vendors at the end of 2015 in danger of going out of business," he said.

Pennsylvania counties and localities nationwide are confronting new challenges as they expand services to address the unprecedented opioid epidemic.

"We do that while we hold our breath, because we're not sure long-term that the funding will be there to sustain what we start," said Kim Bowman, director of Chester County's Department of Human Services.

"It's really hard to plan and keep things going," she said, "because there's such instability every year around the budget and around the revenue."