Erie County Executive Joel A. Giambra's latest financial forecast assumes gradual property tax increases through 2010, modest savings from certain programs and balanced budgets -- probably the most crucial element in his effort to pacify the state-appointed control board.
County Budget Director James M. Hartman will explain the latest four-year plan to the control board's finance committee Friday. But if the full panel eventually approves the document, it will be agreeing that future budgets will balance and that members no longer need to act as a so-called hard board that can more aggressively keep spending in check.
Giambra reasons that he and his successor can always balance budgets by raising property taxes. Balanced budgets are a huge factor in determining whether the state appointees should merely advise elected leaders or become a hard board that can force measures to avoid or close a deficit.
When the control board in November began its first and current "control period," during which it can reject contracts and freeze hiring, members said they were doing so largely because they sensed Giambra's budget proposed for 2007 would fall out of balance.
Giambra and the county's largest public employee unions have taken the Fiscal Stability Authority to court, arguing that the members should have first let elected leaders approve the budget for next year.
"I will ensure that the 2008 budget is balanced, primarily with cost efficiencies, but also with compensating revenues, if required," Giambra tells the board in his four-year plan, using "compensating revenues" as a
euphemism for tax increases.
He said the next county executive, who will take office in January 2008, probably will do the same thing to balance budgets in 2009 and 2010.
Giambra expects that the government will raise 3 percent more each year in property taxes as towns revalue properties upward. So without changing the tax rate, the government by 2010 will collect $16.5 million more than this year.
However, he also predicts he would raise the tax rate slightly, by 2.7 percent over three years, to address a decision by the County Legislature. The Legislature no longer wants Giambra to borrow money for a road-repair program and to instead use dollars on hand. To do this, Giambra says, he needs to raise $4.8 million and proposes the tax increase over three years.
He does not want to pull money from reserves. The government's reserves hit rock bottom at the end of 2004, and officials want to restore the rainy day fund over time to $75 million. County government spends about $1.2 billion a year.
Taxpayers and the control board have insisted that the government find ways to save money rather than raise taxes. Giambra figures that through a host of programs, the county can save $5.2 million next year, $6 million in 2009 and $6.3 million in 2010. But tax increases still will be needed.
He says money will be saved by curbing Medicaid fraud, making more money at the Public Health Laboratory, collecting more on the wireless E-911 surcharge as the number of cell phones grows, and requiring towns to pay for Sheriff's Office road patrols, a Giambra initiative that has sputtered.
Giambra also banks on $3.3 million a year through union concessions or by withholding pay raises if concessions do not materialize and new labor agreements are not signed.
The board must act on Giambra's plan by Jan. 12.
"I think there are three options that can occur," said the control board's executive director, Kenneth Vetter, one of Giambra's former budget directors. "One is approval of the document as reasonable, and that most probably would invoke the stability authority going back to an advisory period.
"The second would be flat-out rejection, saying this is not a tenable plan, and a hard control board would remain. And the third is sending it back for correction."
At that point, Vetter said, the control board would remain as a hard board, until it receives a four-year plan it likes.