SCRANTON – City Council railed against the city’s earned income tax collector and the Parking Authority during their March 29 meeting, as they believe both are forcing the city to secure another $2.75 million Tax Anticipation Note to make payroll and other immediate expenses. During a public caucus before the meeting, certified public accountant William Lazor and two representatives from Berkheimer Tax Administrator answered questions from council regarding earned income tax, as the state now mandates this collection to a single collection agency as opposed to the Single Tax Office. “My concern is that, right now, the city has received very little, if any, money from Berkheimer, and if we take a look at the distributions from 2011 and 2010 from the Single Tax Office, the city was receiving significant revenues during the same amount of time,” Council President Janet Evans said.
“It makes for undue financial hardship at this time for the city of Scranton because our real estate taxes are submitted directly the (Single) Tax Office to Fidelity Bank in Dunmore to pay for Tax Anticipation Note Series A, which must be paid fully by June 30.” Berkheimer responded by saying that money received in January and February would be from the fourth quarter of 2011, which they did not collect, and the majority of new revenue from 2012 isn’t expected until April and May, as the due date is April 30. The Bangor-based tax administrator receives a 1.425 percent fee on all collected earned income taxes, though Councilman Pat Rogan said he was concerned about the company withholding funds to collect interest while the city struggles.
Berkheimer said that they have helped the city avoid bank charges and other fees that “can’t be measured.” “I think where people are upset is that they’re paying their taxes to Berkheimer, they’re holding the money, even if it’s for a very short period of time, they’re making money off the tax interest instead of the city paying the bills,” Rogan stated. Council also said that they had received complaints from those saying their payments were returned to them, and the Berkheimer representatives agreed to look into the matter.
Still paying on its $11.5 million 2012 TAN, the city was also approved to borrow $9.85 million to pay back 2011 debt by Senior Judge Jerome Cheslock of the Lackawanna County Court of Common Pleas on Jan. 27. Additionally, the city’s authorities continue to struggle with debt, which often falls back upon the city. Now, according to council solicitor Boyd Hughes, the city is looking to receive another $2.75 million TAN, but it must first back the unsecured $2.95 million loan that Landmark Bank granted to the Parking Authority last year, holding council “hostage” in the process. “I believe the Scranton Parking Authority must straighten out its act in order to receive that type of agreement, because as it stands today, I can’t say that I, as council president, would ever approve guaranteeing more of their debt,” Evans insisted. “Unfortunately, council has been interjected into this whole morass of the Parking Authority,” Hughes noted. Rogan called for the resignation of the authority’s executive director, Robert Scopelliti, and said the authority should be allowed to collapse so that its duties could be taken in-house.
Hughes presented council with his recommendations on how to handle the situation. In other business, council approved a contract, 4-1, with Knowles Associates, LLC for insurance brokerage services from April 1 through March 31, 2013. The contract was never put out to bid under the current administration, Evans said, at the insistence of council, though Knowles was the lone bidder due to the short three-week window to submit bids. “I directed Attorney Hughes to research and amend the current resolution in order to include much-need corrections and changes with the goal of saving taxpayers money and opening the bidding process in a more appropriate manner,” Evans said. The amendments include that no fee will be paid to a broker of record; the next contract must be bid by Dec. 1, allowing 90 days to prepare bids; and the business administrator must review the coverage and determine if the city is paying premiums on property it doesn’t and/ or in which it has no insurance interest, such as the Albright Memorial Library and the Nancy K. Holmes Branch Library, according to Councilman Jack Loscombe. Councilman Bob McGoff dissented, arguing that amendment packages this large should be introduced earlier to allow further review by all council members before final passage.