Executive vetoes budget change
Making good on a promise, Lehigh County Executive Phillips Armstrong vetoed the proposed budget for 2019 on Oct. 31 because an amendment passed by county commissioners rolled back the millage rate from the proposed 3.79 mils to 3.64 mils.
Armstrong made the announcement in a special news conference at the county administration building attended by the press, members of the Armstrong administration, a couple of aspiring commissioners and Lehigh County Commissioner Amy Zanelli.
Armstrong warned against letting the commissioners’ amended budget harm the county’s bond rating.
The amendment ignored the recommendations of the professional financial staff who prepared the budget. The amended budget was passed Oct. 24 in a 6-3 party line split. The Republican majority preferred to promote a tax cut to residents and borrow money rather than pay cash for planned capital investments.
The immediate payout of the all-Republican vote was apparent. At a meet-the-candidates gathering at Coca-Cola Park a week after the county commissioners’ meeting that tacked on the amendment lowering the millage rate, Commissioners Chairman and Republican Marty Nothstein claimed credit for a recent vote to lower real estate millage rate to what he said is the lowest in 20 years.
Armstrong said the budget as he had proposed it was made with the guidance previously passed by the commissioners which required all capital projects be paid from the county’s operating fund — not through borrowing. That amounted to $7.7 million needed to come out of the operating fund for capital projects, according to Armstrong.
When the commissioners saw the resulting budget they, according to Armstrong, reversed their guidance and “redid the budget.” They balked at the proposed millage rate of 3.79 and decided to pass an amendment offering a tax break to Lehigh County property owners with a revised rate of 3.64. This, according to Executive Armstrong, was when the Commissioners realized their new budget law, Ordinance 2018-22, which eliminated the financing of capital projects, would have a negative effect on future budgets.
This led to the second version of the 2018 budget — one that projected just a portion of meeting capital expenses being met with the operating fund ($1.6 million), and the remainder ($6.4 million) needing to be financed. This was the budget with the administration’s proposed 3.79 millage rate. This final budget proposal projected an ending operating fund balance of $26.1 million.
Armstrong also said he was concerned about the effect of the Republican budget on the bond rating drop he predicts will happen with the inadequate revenue linked to increased borrowing.
“By keeping the mileage rate at 3.64 for the majority [Republican] party,” Armstrong said, “the Lehigh County board of commissioners is endangering the current Aa1 bond rating of the county.
“If our bond rating is lowered, as we have recently seen happen in the City of Allentown, it will result in increased interest costs related to the planned bond issue borrowing for the $70 million addition [to] and renovation at Cedarbrook Senior Care and Rehabilitation Center [therefore] costing Lehigh County taxpayers even more in the future.”
Armstrong proposed a compromise at the Oct. 31 news conference: “If the board of commissioners does not override my veto and the proposed millage is returned to 3.79 mils, then in 2020 when our 2019 audited financial are completed … and approved by the board of commissioners, that if those results show an excess over our projected stabilization fund/ending fund balance of $26,10,286 (including encumbrances) said excess will be placed into the pension fund to reduce the pension liability in 2020.”
The commissioners left in place the pay step program Armstrong included in the budget he presented in October.
The revision addressed the problem of increasingly wide pay disparities between union and nonunion employees. By keeping the proposed pay step program in place, the commissioners, according to Armstrong, “addressed this inequity by reinstating the step program for valued non-union employees” in the proposed 2019 budget.
Armstrong’s message also cautioned against making “rash short-term fixes” before completion of the ongoing $90,000 pay study which the commissioners approved and will be completed during 2019.