Modified: February 23, 2017 5:13pm
Today, Erie County Executive Mark C. Poloncarz issued the following statement outlining next steps following the Erie County legislature’s failure to approve a borrowing agreement reached earlier this month between Erie County and the Erie County Medical Center Corporation which would have saved the county millions of dollars in annual payments to the hospital and also facilitated the hospital’s construction of a new and badly-needed emergency room. While the vote was 7-4 in favor of the plan, the vote failed as 8 votes in the affirmative were necessary to approve the proposed borrowing. The legislature’s rejection of the agreement and concurrent failure to produce another plan will force a re-visitation of planned spending in the 2017 Erie County budget in order to bridge a budget gap of approximately $18 million caused by their action today.
“I am disappointed at the actions of some members of the legislature who failed to support a sound and reasonable agreement reached between my administration and ECMC which would help both parties meet their needs This important issue was discussed at length and in great detail over the past four months, including a meeting in late January that included legislators, the Comptroller, the Erie County Fiscal Stability Authority, and ECMC officials to outline the gravity of the situation and discuss potential actions. The importance of the issue and its impact on the county budget were clearly delineated in that meeting and numerous times since then, and while the ignorance of the process and what is at stake was clearly evident on the part of some attendees, the adults in the room left with a better understanding of not only the necessity of the agreement but also its benefits.
It is important to note that throughout the process, my administration continually sought to keep lines of communication open and to work with legislators to craft a compromise that works for the county and ECMC. Based on recent discussions I had expected to announce today a compromise had been reached, an alternative agreement that was not identical to the proposal before the Legislature today but that would have satisfied all parties involved. I am saddened to say that I cannot make that announcement, and that members of the Legislature’s majority, who were in fact in the minority in today’s vote, instead chose to act against the best interests of the greater community. However, I would like to thank the members of the Legislature who supported my proposal for their understanding of the issue and advocacy for a common-sense solution. Legislators Loughran, Burke, Savage, Miller-Williams, Grant, Hardwick and Dixon should all be commended for their efforts to bring this issue to a satisfactory conclusion, and I thank them for their hard work on behalf of their constituents.
As Erie County Comptroller, I supported a measure very similar to this one under then-County Executive Collins that enabled ECMC to construct the Terrace View nursing facility. I did so because it was the right thing to do for the community. That plan was widely supported by legislators and resulted in a much-needed new facility on the ECMC campus. Somehow, the proposal to assist ECMC with borrowing for a sorely-needed new emergency room did not engender the same enthusiasm from four members of the republican majority.
Because of the failure of the Legislature to approve the borrowing on behalf of ECMC the County will not be able to take advantage of a multi-million dollar credit we would have received for saving ECMC tens of millions of dollars on its borrowing costs. As such, we are now facing a potential $18 million shortfall due to expected obligations the County must make to ECMC for reimbursement of indigent care it previously provided. This represents nearly 15% of our entire discretionary budget.
In anticipation of today’s vote, I previously asked Budget Director Robert Keating to prepare a plan to ensure the County does not end fiscal year 2017 in a deficit. That plan would not have gone into effect if today’s proposal passed. Because it did not pass we are now facing a budget shortfall of approximately $18 million. As such, the Budget Office is identifying potential cuts to 2017 spending on roads, parks, youth and senior services, convention and visitor bureau related expenses, arts and cultural organizations, and others to help bridge this newly-created budget gap. While I anticipate being able to close the budget gap, organizations will not receive the full amount approved in the budget unless the county receives a significant amount of additional unbudgeted revenue, which at this time we do not anticipate receiving.
Some legislators advocated using the County’s “piggy bank,” the fund balance, as a solution to the problem of paying the additional $18 million to ECMC. This is fiscally unwise and would result in a diminution of available balance and a concurrent decline in our credit rating. Use of $18 million of fund balance would be approximately twenty percent (20%) of our unassigned fund balance and would still not solve the problem for next year. You must pay recurring expenses with recurring revenues, not “one-shot” sources. A similar situation of using one-shots instead of recurring revenue to pay recurring expenses resulted in the Red/Green fiscal crisis in Erie County.
We have worked for more than a decade to recover from that crisis, and my administration will not allow the few members of the Legislature to drag us into another one. While my office and ECMC have remained open to new ideas and continued dialogue, we have been met with foot-dragging, shifting arguments, and moving goalposts as we worked to reach consensus. If a compromise can still be reached utilizing the Erie County Fiscal Stability Authority as a borrowing mechanism I am still willing to work to reach an equitable agreement for all, but an agreement that must work for the County. I hope at least one member of the Legislature who voted against the proposal today is willing to do the same, which will benefit the entire community.”