Somerset commissioners, treasurer at odds over investments

Oct. 12—SOMERSET, Pa. — An ongoing debate over how Somerset County commissioners want to invest $20 million in funds has stalled the revenue-generating effort.

And now, it appears to be headed to court.

Despite a county resolution directing the move, Somerset County Treasurer Anthony DeLuca said he won't forward the funds to open short-term CDs with two banks because all of the money isn't being invested into the bank offering the highest rates.

DeLuca said the board has also been shutting him out of the due diligence process, as well as a formal vote on the move that county commissioners say he has no right to cast.

"The county code states that the county commissioners work alongside the treasurer ... but they are making their decisions without me," DeLuca said.

"There's no checks and balances."

The commissioners said DeLuca misunderstands his office powers and duties.

While DeLuca's role includes serving as a custodian of county funds — and can provide county providing rates and recommendations for county investments — he has no final vote because he is not an elected commissioner, Solicitor Michael Barbera said.

Both sides said they may explore legal action, with Barbera saying the county would seek a court order to compel DeLuca to release the funds, if necessary.

"The treasurer is mistaken in both the law and in fact," Barbera said, after DeLuca accused the county of collecting "illegal" bids.

The latest disagreement came as county officials statewide have been taking advantage of rare — and growing — interest rates in CD's, money market accounts and other savings to try to generate revenue that is otherwise typically relied on through taxes.

The two sides have been split on how to invest the funds for more than a month, with county commissioners initially voting to transfer millions of dollars into CDs through the Pennsylvania Local Government Investment Trust.

DeLuca objected to the move last month, saying their rates were just a fraction of a point above a local institution, Pittsburgh-based First National Bank, which has a branch in Somerset.

When the commissioners met for their regular meeting Tuesday, they cited new, higher rates received this week and voted 3-0 to transfer $10 million to First National in a 90-day CD generating 3.82% and another $10 million in Somerset Trust for a 60-day CD at 3.36%.

DeLuca said that as treasurer, he should have been part of that discussion process.

He also tried to vote against the move during the commissioners board meeting, saying the board was turning down a higher 3.4% rate for the 60-day CD through First National Bank.

"Is that fiscally sound?" he said.

DeLuca said the county will lose $25,000 in interest by choosing a lower rate — a figure county officials disputed as "way off."

They noted DeLuca was basing his interest based on an entire year's worth of revenue when the county is only able to commit the funds for 60 days.

Based on 60 days, it appears the difference would add up to less than $658 — a fraction of the more than $120,000 in newfound interest revenue the county expects to generate over the next few months through a broader set of investing.

Counties across the state have been taking such steps through rising interest rates and because each have American Recovery Act funds that in many cases, won't be spent until next year.

Somerset County received more than $14 million it plans to spend on infrastructure, communications upgrades and other needs.

Investing those dollars, while possible, is one point where the commissioners and treasurer agree.

Commissioners Gerald Walker, Pamela Tokar-Ickes and Colleen Dawson defended their decision to invest $10 million with Somerset Trust because the rates aren't far off and the bank has a long history in the county.

Somerset Trust was founded in 1889 and has been headquartered in Somerset since.

Walker said the institution's long relationship with the community and impact "far exceeds" the fraction of a percentage point in interest.

But DeLuca countered First National Bank also has local ties, given the fact it has an office in the county and supports jobs.

"This is about interest we continue to lose ... money we could be generating," he said, adding that he has no ties to the institution.

First National Bank — not Somerset Trust — has overseen the most of the county's funds for years, DeLuca added.

A first-term Republican treasurer, DeLuca has been at odds with Somerset's commissioners several times since taking office this year.

The commissioners board, which also has a 2-1 Republican majority, maintains the county code that guides Pennsylvania counties backs their moves — enabling the county weigh ever-changing rate quotes when considering investing Somerset County dollars.

It's a different matter than seeking formal bids for a construction project, Barbera added, after DeLuca raised the question of whether the board violated Pennsylvania's Sunshine Law.

The board said they discussed the matter earlier this month in a properly advertised workshop.

To DeLuca, the broader issue — including county code guidance — contains "a gray area" he wants the court system to clear up.

After Barbera said the county would seek an "mandamus" action ordering DeLuca to transfer funds being deposited into the CDs, the treasurer said he won't oblige — and "I guess we'll see each other in court."

DeLuca said he also wants the county to establish an investment policy to better clarify how and when funds can be moved from one fund to another when revenue-generating opportunities arise.

If it means battling the commissioners in court, "I'm willing to do it," he said.