Cambria’s financial picture leaves two leaders at odds
EBENSBURG – Accountant Joel Valentine of Wessel & Co. said government agencies have to look at funding in different ways, sometimes crediting loan money as revenue and other times as a liability.
Cambria County’s elected officials seemed to be doing the same, during discussion of the county’s 2013 audit report at a Thursday commissioners meeting quickly became a debate over how best to fund government.
Valentine said the audit shows the county ended last year in the black by $2.7 million. That sounds like good news. However, the source of the money is a $5 million loan without which the county would have been in the red by $2.1 million – almost three times more debt than last year.
The reason for the loan was to pay off the second half of the county’s yearly $10 million tax anticipation loan that provides a cushion until the county begins receiving tax payments in spring. The county would normally pay off the first $5 million around May, and the second half in December.
But in December, the county came up short; there were millions in unpaid bills on top of the $5 million loan payment. So, the commissioners voted to take on a longer-term $5 million loan to help pay the bills.
To try and counterbalance the added debt, President Commissioner Douglas Lengenfelder said the commissioners essentially decided to refinance the unpaid balance of the $10 million loan to $5 million at a lower interest rate.
He said the move allowed the county to address its cash-flow issues without leaving a huge balance to be repaid at the end of each year.
Controller Ed Cernic Jr. agreed that the $5 million loan was a fiscally responsible move, but he said the Wessel audit proves there are still chronic problems that the commissioners aren’t working quickly enough to fix.
“My concerns that I had last year … this audit, by an independent agency, has confirmed everything I said,” he said.
He said the commissioners took too long to address the winter shortfall, and had they not refinanced the loan, the county would have defaulted. Lengenfelder shot back that the county would have been OK either way and said Cernic unnecessarily paints a bleak picture of county finances.
“It’s irresponsible to be throwing out a term like ‘default’ on a regular basis when we know there are other options,” he said.
One such option could have been paying less into the pension fund, Lengenfelder said, which stood at 89 percent at the end of 2013 – compared to 79 percent at the end of 2011 – and now sits at 93 percent.
Cernic balked at the idea of withholding money from the fund, which he said is among the best in the state. Such tactics led to the state’s current pension crisis, he said.
“They (the state) have a huge liability coming in a couple years,” he said.
Lengenfelder said the audit shows progress. The county is paying down debts without taking on longer repayment plans and adding money to accounts like its pension fund.
“Even if you didn’t like the way we addressed it (cash-flow issues), we addressed it,” Lengenfelder said.
Mirror Staff Writer Kelly Cernetich is at 946-7520.