City residents could face huge tax bills on top of already expected increases
By Stacy Brown | PA Independent
HARRISBURG — Scranton officials are working to correct a federal audit that says the city misused $11.7 million in taxpayer funds for housing programs.
The CDBG program provides annual grants to cities and counties nationwide to develop urban communities by providing affordable housing and expanding economic opportunities for low- to moderate-income individuals.
Since the report came out in late October, Linda Aebli, Scranton's director of the Office of Economic and Community Development, which oversees the city’s CDBG program, said the amount the city may need to repay HUD could be substantially less.
"We've been working with HUD and going through all of the documentation, and it looks like we may be responsible for $160,000,” Aebli said.
Aebli said records she compared with HUD show that projects, including community policing, proved to be justified uses of the grant money, and some completed projects listed in the audit were identified as canceled.
"We are still going over documents, so there isn't much we can comment on at this time," HUD spokeswoman Maria Bynum said, adding that HUD would review its next step after an internal review is completed.
However, Scranton residents, who could find themselves on the hook to repay these funds no matter what the amount, are facing higher taxes this year in a city with a median household income of less than $30,000.
The city will repay to HUD $111,000 to cover costs related to the salary of the city’s director of licensing, inspections and permits, Aebli said. New HUD guidelines now require the city to pay the entire $44,600 salary, ending a decades-old practice in which CDBG funds paid for half, Aebli said.
Also, more than $49,000 paid to the Scranton Redevelopment Authority, which disseminates information relating to housing and community development and studies national, state and local legislation affecting housing and community development, will be repaid, Aebli said.
"I can assure you that nothing was done wrong. Everything is vetted properly and must go through City Council for approval as well when you're talking about CDBG funds," City Controller Roseann Novembrino said.
Aebli said the audit’s findings weren't necessarily bad news. She said her relatively new staff should view them as an eye opener and document everything.
"Make sure all the i's are dotted and all the t's are crossed," Aebli said.
But, repaying $160,000 could burden taxpayers in the distressed city. Misused or misappropriated funds are required to be repaid by the municipality, according to the audit.
And financially distressed municipalities, such as Scranton, must raise taxes or find other ways to repay such large sums of money.
However, budgetary deficits in the county and city are putting the squeeze on Scranton residents, who are facing rising taxes in the upcoming year.
For example, Lackawanna County Commissioner Corey O'Brien announced that county property owners, including Scranton, would see their property tax bill raised by 38 percent to help close a $20-million deficit.
In addition, Scranton Mayor Chris Doherty on Tuesday announced a property tax hike of 29 percent for 2012 and increases to the business privilege and mercantile taxes. Doherty also announced plans to lay off 29 firefighters and 19 tax collection office workers as well as buy out 10 Department of Public Works employees to help the city balance its 2012 budget, which has a projected $8-million deficit.
According to the 2010 census, the median income for a household in Scranton was $28,805, and the median income for a family of four was $41,642. The per capita income for the city was $16,174. Fifteen percent of the population was found to live below the poverty line.
