Berks County commissioners poised to vote on $520 million budget

Berks County officials say that the proposed 2018 budget is a plan for the future.

Budget Director Robert J. Patrizio Jr. presented a $520 million spending plan to the county commissioners last month that would require the first tax increase in five years.

The proposal calls for a 4 percent increase in the county property tax rate.

Patrizio said that the tax increase is needed to fill an expected $5.3 million operating deficit.

“We knew this was coming,” he said. “The reality is that we have a structural issue when we look at our budget. We know that our personnel costs have consistently grown at a greater rate than the growth of our tax base. We know the best we can do is try to manage that in a way that we don’t need year-over-year tax increases.”

With the increase, property taxes are expected to bring in about $143 million. Other revenue sources include state and federal grants of $206 million, and $102 million in fees for services.

In addition to growing personnel costs, Patrizio said, decisions to cut funding at the state level and increase spending at the county level have created a shortfall that needs to be dealt with now rather than carried into the future.

Without a tax increase, he warned, the deficit could grow to $14 million by 2022.

The board – Republicans Christian Y. Leinbach and Mark C. Scott, and Democrat Kevin S. Barnhardt – is expected to approve the budget at its weekly meeting Thursday.

As the commissioners contemplate whether to take Patrizio’s advice on raising tax rates now to avoid a bigger increase down the road, here are just some of the takeaways from the spending plan they’re considering:

Personnel costs

The county is planning on spending $164 million on salaries and benefits in 2018. That accounts for about 32 percent of all budgeted expenses and rose by about $7 million from 2017 levels.

About 72 percent of full-time county employees are represented by labor unions that negotiate salaries and benefits on behalf of their members. Across all departments, the average salary will rise about 2.5 percent.

Patrizio said that the decision by the commissioners to hire 22 additional correctional officers at Berks County Prison to address a growing population dealing with severe mental health issues and three more clerk positions increased personnel costs.

The prison – with spending set at nearly $39 million – is among the top three most expensive departments in the budget. HealthChoices, the managed-care programs for medical assistance recipients, carries by far the biggest cost to operate at $108 million, while children and youth services is second at $47 million.

State-level cuts

About 60 percent of the proposed tax hike is a direct result of decisions made at the state level.

Those include decreases in judicial reimbursements; frozen Medicaid reimbursement rates; a decline in revenue from housing state parole violators at the county prison; and hiring additional caseworkers to keep up with an influx of child-abuse cases due to new requirements passed after the Jerry Sandusky scandal.

That adds up to a $5.2 million decrease in state funding.

County-level spending

About 40 percent of the proposed tax hike is a direct result of decisions made by the board to increase spending in some areas.

The proposal includes an update to the life expectancy rate on county pension liabilities; an increase in funding for Reading Area Community College; the addition of two deputy sheriffs; and the hiring additional correctional officers and mental health professionals at the county prison.

That adds up to a $3.5 million increase.

Discretionary programs

The proposal includes funding for about 15 programs not listed as essential responsibilities of county government.

But, Patrizio said, the board came to a consensus that all but one would continue to receive taxpayer money.

Those programs include the operation of Berks Heim; county parks; central processing; pretrial services; treatment court; detective services for municipalities; the fire training center; the law library; the local veterans affairs office; a re-entry program for inmates at the prison; and the preservation of farms.

Also included: contributions to the Council on Chemical Abuse; the Greater Reading Economic Partnership; countywide library system and local Penn State Extension.

“If you cut these programs, some are the only things that our law-abiding citizens ever enjoy and some would have unintended consequences,” Patrizio said. “There are four, for instance, that divert people from jail or keep them from going back to jail.”

He pointed out that three others – central processing, detective services for municipalities and the fire training center – provide services that would otherwise need to be paid for by individual municipalities.

Bonds, loans and interest

Patrizio said that the commissioners have taken steps to reduce spending that are less obvious.

Paying down debt service and refinancing loans to take advantage of lower interest rates, he said, have led to an annual savings of about $1.9 million. And, since the board decided two years ago to be more aggressive with the investment of its reserves, the county has collected an additional $1.2 million in interest income.

The county will spend $22.2 million in 2018 toward paying off its debts.

Patrizio said that the county is on track to pay off its debt service by 2034 – assuming it does not add any new debt service.

Pending big issues

The current forecast, Patrizio stressed, assumes that Berks Heim is still owned by the county and that the commissioners have not made any decision about the future of the prison.

The commissioners have just begun to investigate the fate of the prison.

While the board agrees that the 84-year-old portion of the building has outlived its useful life and needs to be replaced, the commissioners have acknowledged that financing the construction of a new prison will cost more than $100 million and will likely lead to additional tax increases.

The board is also considering what to do with the county-owned nursing home.

Faced with flat reimbursement rates and a projected $1.5 million deficit by 2020, the commissioners are weighing the options: increase property taxes to cover the costs, get out of the business or investigate the feasibility of handing over the operation of Berks Heim to a nonprofit.

Patrizio shared a look at what the impact might be on taxpayers if they are asked to help pick up the tab to keep the Heim under county control. The figures show the property tax rate would increase nearly 2.5 percent by 2022.

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Biggest budget winners

Jail system: Up $3.4 million.

Liquid fuels fund: Up $3.4 million.

HealthChoices: Up $3 million.

Biggest budget losers

Human services: Down $1.2 million.

Community development: Down $627,000.

Security: Down $428,000.