Luzerne County has repaid a controversial $20 million shutdown avoidance loan, according to a release from county Acting Manager C. David Pedri.
A county council majority approved the loan in November to prevent mass layoffs, a debt repayment default and service cuts due to state budget impasse funding delays.
Overdue state funding started arriving to repay the loan after state officials approved an emergency budget relief package last month.
According to Pedri’s release, $46,185 in interest was paid on the loan.
The county expects to recover a portion of the interest costs stemming from Mental Health and Developmental Services and Children and Youth, the release said. The administration is in the process of identifying the dollar amount that can be recouped, he said.
The county’s 2016 budget had earmarked $350,000 for interest payments on the loan, which will free up at least $303,814, Pedri said.
The administration thanked Luzerne Bank and its partners for providing the loan “during a difficult financial time for Luzerne County.”
The county council’s initial failure to approve the loan and other county fiscal issues prompted Standard & Poor’s to downgrade the county’s credit rating.
Several county council members have publicly criticized the drastic downgrade, which reduced the county two notches from BB to BB+. It lowered the county’s financial position from investment grade to speculative, which is labeled as “junk” by some in the investment world.
Standard & Poor’s cited its “worsening view” of county management and the county’s “political gridlock” and criticized both the administration for failing to sufficiently monitor county finances and the council for initially rejecting the $20 million loan to guarantee the Dec. 15 debt repayment would be met.
The county’s rating also has been placed on a credit watch list with “negative implications,” according to Standard & Poor’s.
The county was in a bind before the loan because human service agencies were kept going during the state budget impasse using money needed for a debt repayment and payroll in other county departments, officials said.
Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.