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Buffalo News Article on County Cash Flow

Mychajliw warns of low county cash flow

BY: Denise Jewell Gee / The Buffalo News 

Erie County won't have the cash to pay a $15 million bill due next week and will ask the state if it can delay the payment, County Comptroller Stefan Mychajliw said Thursday.

Mychajliw, who took office Tuesday, said he was concerned to learn how little cash the county currently has on hand to pay expenses as it waits for property taxes and other revenue to begin arriving in late winter.

“We want to be proactive in notifying the administration that there's a cash crunch,” said Mychajliw, who replaced former County Comptroller David Shenk this week after winning the November election.

The Comptroller's Office on Wednesday received notice from the state that a $15 million bill related to Erie County Medical Center will be debited from the county's bank accounts next week. The payment is part of an estimated $29 million for care at the hospital and the nursing home that the county was expected to pay last year but that was pushed into 2013.

The first of those bills has now come due just as the county is experiencing a cash shortage. Mychajliw met with County Executive Mark C. Poloncarz on Thursday to discuss making a joint request to delay the payment.“We're working together in a collaborative manner to formally request to New York State to delay the payment that's supposed to be due technically Jan. 8 until March when there's more cash in the county's coffers,” Mychajliw said.

The county historically has experienced a cash shortage in the winter months and often uses short-term borrowing to cover bills that come due as it waits for revenue to arrive. Erie County last year borrowed $75 million through a revenue anticipation note to help cover expenses during that stretch, including the payments required by the state for ECMC.

Mychajliw said he was surprised to learn when he took office this week that the amount of cash the county had on hand to pay bills at the end of the year was $9.6 million – far less than the $41 million his office calculates should have been available at the end of the year.

The amount of cash the county has available to pay bills at any point is affected by the timing of when money comes in and bills are paid. It does not reflect whether the county is spending more or less than what it budgeted for in a year. The Comptroller's Office is charged with monitoring the county's cash flow.

“We've offered to assist them in any way possible, including providing the experience and guidance that we have in this office from managing and handling that for six years,” said Poloncarz, who served as county comptroller before becoming county executive last year.

Poloncarz said the county has entered some years with a similarly low cash flow – particularly in years in which the state delayed reimbursements – but that the timing of the required hospital payment this month means the situation must be addressed. Greg Gach, a former county budget director who was appointed by Mychajliw as deputy comptroller for finance this week, said the office is concerned about when the state would require the additional hospital payments. “It's a very serious cash issue, but it's manageable,” Mychajliw said.

Source: Buffalo News
Denise Jewell Gee, January 4th, 2013

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