10/24/14: Poloncarz Sets the Record Straight on Comptroller's False Criticism of 2015 Budget

Modified: January 23, 2015 3:25pm

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ERIE COUNTY, NY— Erie County Executive Mark C. Poloncarz has sent a letter to the Erie County Legislature in response to Comptroller Stefan Mychajliw’s false comments in which Mychajliw said the County’s proposed 2015 Budget included a “massive increase in spending” due to “pork and patronage.”  In a press conference held on October 15th, almost immediately upon the issuance of the 2015 Budget (and before the Comptroller had actually received the 2015 Budget), Comptroller Mychajliw attacked the budget and then again in his Review of Major Budget Revenue and Expense Projections which was submitted to the Legislature after the Charter mandated deadline.

Due to the nature of Mychajliw’s claims, the Poloncarz administration believes it is important to correct the record with facts and to provide a rebuttal with data and evidence, as opposed to Comptroller Mychajliw, who failed to provide any evidence to support his allegations.

“As has become a hallmark of his administration, Comptroller Mychaljiw has chosen to make a number of inaccurate statements that mislead the public and the Legislature,” said Poloncarz. “While this may generate the media attention he so craves, it does an injustice to the Legislature as the purported ‘information’ he provides is inaccurate and will be worthless for Budget deliberations. The Comptroller’s attention-seeking and inconsistent generalizations provide no specific details that can be reasonably reviewed or even debated and in the instances in which he makes comments he deliberately omits key details.”

The Erie County General Fund budget for 2015 will be $1.43 billion, which represents a 2.86% or $39.7 million increase in spending over 2014. First, two drivers accounting for $15.5 million nearly 40% of the “Increase in spending” actually have zero impact on the County’s Budget, yet must be included for reporting purposes: 

  • $8,758,599 increase in sales tax revenue shared with municipalities.  Although Erie County does not keep this funding, it nevertheless is required to be budgeted and included in the County’s total budget; and
  • $6,712,570 increase in Family Assistance costs for this mandated public assistance program.  This ‘cost’ is 100% reimbursed by the federal government;

By factoring out just these two areas, the actual spending increase drops to approximately $24.2 million or an increase of only 1.74%, which is well below the average rate of inflation noted earlier.

Other drivers of this overall increase in spending include:

  • $8,510,103 increase in salary expense related to union contracts and negotiated step increases for County employees, particularly due to the CSEA contract which was unanimously approved by the County Legislature in 2014.  And, with a large number of these contractual salary increases going to employees within the Department of Social Services with either federal or state reimbursement associated, this figure is also artificially inflated to appear greater than its actual budgetary impact.  Additionally of note, the 2015 Budget actually features fewer jobs than in 2014;
  • $4,953,500 increase in Safety Net Assistance costs for this state constitutionally mandated program;
  • $3,606,852 increase in state mandated costs by the Office of Children and Family Services (“OCFS”) for the State Residential Facility program for Erie County youth placed in OCFS’s custody and care by the family and criminal courts;
  • $2,437,132 increase in debt service payments on the County’s bonds; and
  • $2,000,000 increase in a required payment to Erie County Medical Center Corporation (“ECMCC”) under a 2012 agreement approved by the Legislature.

The above costs total $41,020,408 – above the $39.7 million increase in the County’s 2015 Budget compared to the 2014 Budget. It is important to note that these are all mandated costs and charges, either by the federal government, New York State, by union contracts, and due to legal agreements (such as with ECMCC and local towns, cities, villages and the NFTA).

Additionally and alarmingly, the Comptroller continues to demonstrate his confusion about basic accounting principles, specifically the difference between fund balance and liquidity.  The letter identifies past examples of the Comptroller’s public statements revealing his misunderstanding of these key fiscal concepts, and advises the Legislature on the true nature and role of each in County finances.

“This is not the first time Mr. Mychaljiw has confused these two elementary accounting principles, and his continued ignorance of them should be disturbing to taxpayers and the Legislature as well,” Poloncarz added.  “Both cash flow and cash flow borrowing are wholly within the purview of the Comptroller’s office, not the administration. In his short tenure as Comptroller, Mr. Mychaliw has made a habit of not working with the Division of Budget and Management to address financial concerns and issues. Now, his latest report has left me no choice but to correct his errors so that the Legislature has a clear picture of the Budget to begin deliberations.”

Poloncarz concluded, “Finally, the Comptroller’s claim that the 2015 Budget is filled with new ‘pork and patronage’ is another example of his empty generalizations. It is the height of hypocrisy for Mr. Mychajliw to talk about patronage when he’s filled his office with former Republican legislature staff members who have absolutely no background in accounting, finance or auditing while he is actively trying to terminate and layoff career civil service auditors at the same time.”

A copy of the letter sent to the Legislature is here.