Westmoreland County plans to borrow about $140 million to bolster its pension fund.
County commissioners this week unanimously approved a bond issue to ensure the fund that pays benefits to more than 1,300 government retirees remains solvent over the next 30 years.
Finance director Meghan McCandless said the amount will be paid back over 20 years. Commissioners opted to borrow rather than potentially raise property taxes, she said.
“In lieu of a tax increase, the commissioners wanted to make sure they weren’t adding any additional pain onto the already burdened taxpayers,” McCandless said.
In December, commissioners approved a $339.7 million budget for 2021 that included a $2.3 million deficit that was made up through the use of surplus funds. That spending plan included a projected $12 million payment to the pension fund. More recent estimates have increased the pension fund payment to as much as $17 million this year.
The borrowed money will be used to make annual payments to the fund and reduce the amount each year the county has to take from its general fund to meet its obligations. In 2021, it will result in an estimated general fund savings of $7.9 million, McCandless said.
Property taxes were last increased for 2020 by a previous board of commissioners. That 2.4% tax hike was the first in 15 years. Commissioners made no changes to the property tax rate for 2021.
The pension fund, most recently valued at more than $500 million, is funded at nearly 82%. The borrowing plan will ensure the account is 100% funded.
Commissioners passed this year’s budget with the idea of also approving the borrowing plan. As a result, the county expects to end the year with a surplus of more than $8.3 million.
