Taking it to court: Somerset County Commissioners vs Treasurer, an exclusive

Editors note: Learn more about this lawsuit in upcoming articles.

The battle lines have been drawn. The Somerset County Commissioners have filed a lawsuit against the Somerset County Treasurer basically over who has the authority over the county's fiscal investments.

County Solicitor Michael Barbera and the County Treasurer Solicitor David Leake have both jumped into the fray with letters and arguments. The last move was by Barbera who filed a lawsuit against Somerset County Treasurer Anthony "Tony" DeLuca at the end of the day on Oct. 18. Leake has until Nov. 8th to respond and answer the suit.

Where it began

During a commissioner's public meeting Aug. 30, DeLuca suggested that the board consider investing county general funds with First National Bank in a money market and Certificate of Deposit, aka CD, accounts.

Unfolding:Somerset County commissioners, treasurer at odds over banks

In recent years, investment options have been "rather limited because many acceptable investments vehicles offered only nominal interest rates," according to the commissioners. But recent increased interest rates have made these investments "more attractive."

The board asked DeLuca what interest rates of other banks were offering and he said he did not know. The commissioners then directed DeLuca "to seek rate quotes from other financial institutions as well," according to the lawsuit.

He did not do so.

In the following regular public meeting two weeks later, the commissioners determined that the Pennsylvania Local Government Investment Trust, aka PLGIT, was, at that time, offering the best interest rates. The board adopted a resolution to move county funds to PLGIT.

PLGIT is "a historical safe haven for Pennsylvania public funds," according to the lawsuit.

More:Suspended Somerset DA sues county for back pay and to reinstate benefits

The board had more than $13 million in undistributed funds for the county's share of the American Rescue Plan Act of 2021. The board decided to invest a total of $25 million in short-term investments; $5 million in a money market account, $5 million in a 60-day CD and $15 million in a 90-day CD.

After the meeting, DeLuca told the commissioners that First National Bank would be willing to beat PLGIT's interest rates.

"He questioned the Boards decision to invest with PLGIT and refused to transfer funds," according to the lawsuit.

On Sept. 28, the commissioners and the treasurer and their respective legal counsel met.

DeLuca's opening two money market accounts with First National Bank in the name of the county to invest Somerset County Tax Claim Bureau and Somerset County Area Agency on Aging funds was discussed. His action was done on his own accord and without authorization, the commissioners claimed in the lawsuit.

At that meeting, the commissioners directed DeLuca to solicit quotes, in writing this time, from area financial institutions. The following day, DeLuca did so and specified responses due Oct. 4.

The responses were received and reviewed by the commissioners at a public workshop session held Oct. 5.

Because the board wanted to lock in the fluctuating interest rates as soon as possible, they started the process of taking action to invest county funds with plans to ratify those actions in the next commissioners' regular meeting on Oct. 11.

Before:Commissioners switch to fixed interest rate on bonds

On Oct. 7, DeLuca wrote a letter to the commissioners; "...blindly accusing the Commissioners of perceived violations of Pennsylvania law and even purportedly referring matters for criminal prosecution to the Pennsylvania State Police — a law enforcement agency with which Defendant was affiliated for many years. He refused to transfer any money into any account at Somerset Trust Company, but not First National Bank," according to the lawsuit.

The next business day, Barbera wrote a response addressing the allegations by the treasurer.

The commissioners unanimously voted to ratify a resolution to place county funds with Somerset Trust Co. at the next regular meeting. DeLuca attempted to cast a dissenting vote but he was denied. He is not a member of the Board of Somerset County Commissioners.

Leake then wrote a letter for DeLuca, stating that the county code gives ultimate authority to approve the investment of county funds to the county treasurer and "absolutely provides a seat at the table for the County Treasurer in the fiscal matter of investments of funds."

As a result the commissioners filed suit, stating: "As Defendants position is grossly inapposite to the great weight of authority in this Commonwealth and, thus, unfortunately, have no other choice but to request the learned intervention of this Honorable Court."

Where it is going

The courts have been asked ultimately to determine that a county treasurer cannot refuse his signature on a payment for a transaction duly approved by the county commissioners. And a treasurer has no independent authority to open accounts in the county name. Moreover, the board is asking the court to state that a treasurer has no seat or vote on the board of commissioners.

"Simply stated, treasurers are elected to county office to accounting for county money, not to spend it or to have a voice in what is done with it. Contrary to Defendant's contentions he does not wield 'ultimate authority' over the fiscal affairs of the County. To hold otherwise would cut against the clear weight of Commonwealth authority and totally upset the structure of county governance thereby established," according to the lawsuit.

As for the treasurer's office, Leake wrote: "I have accepted service of the Complaint for Declaratory Judgment filed by the County Commissioners.  I have also been in contact with Attorney Barbera to determine if any preliminary legal matters, such as having the case expedited, can be agreed upon by the parties. I am currently in the process of drafting a Responsive Pleading to the Complaint, which will set forth our position that the County Code (the applicable law) absolutely gives our County Treasurer, at least very least, equal authority to that of the Commissioners in the fiscal matter of investment of County funds. Mr. DeLuca was the one that suggested that the County invest funds to begin with, and is willing to fight to make sure any investment made by our County is protected, invested locally, and produces the best return on the investment for our County residents."

This article originally appeared on The Daily American: Somerset County commissioners sue treasurer over fiscal control