Share this article

print logo

With surplus, county tax hike unlikely Auditors put total at $23.8 million

Erie County government ended 2006 with a surplus of $23.8 million, according to outside auditors who have completed their review of a year when property taxes rose 20 percent and the sales tax in the county reached the state's second-highest level, 8.75 percent.

With the $14.4 million left over after 2004 and 2005, the government is three-fourths of the way home on its march to place $50 million in reserve. County officials see that as a critical benchmark in persuading Wall Street's rating agencies to lift the county's credit score.

Despite its improving financial health, Erie County's rating is one notch above junk status, the worst in the nation for such a large county government. Erie County serves 920,000 people and spends more than $1 billion a year, mostly on social programs mandated and supported by the state and federal
governments.

Four-year forecasts indicate no chance that the sales tax will recede from 8.75 percent or that the county's property tax will drop. In the future, those decisions will be left to the Legislature and a new county executive, since Joel A. Giambra will leave office at year's end.

Meanwhile on Monday, county lawmakers concluding their midyear budget hearings said they foresee no need for a sales or property tax increase in 2008, though this year's budget has some soft spots. This being an election year with all 15 legislative seats up for grabs, lawmakers are especially loath to raise taxes.

"I do not see the likelihood of a tax increase," said Legislator Robert B. Reynolds, the Hamburg Democrat who led the Finance and Management Committee in quizzing department heads about their expenses and income. "I am going to try my darnedest to work within restraints."

Two surprises haunt this year's budget:

*The government had expected to draw in millions by selling an outside company the right to collect and keep the overdue property taxes the county has been unable to collect with its own small-scale effort.

But Erie County's state-appointed control board criticized officials for receiving only two offers, even though those offers came from the leading companies in the tax-lien industry. The control board told county leaders they must start over, casting a wider net for bidders.

Giambra's budget director, James M. Hartman, said that if the control board rejects the deal again, the county will have to go without almost $5 million it had been counting on for this year and perhaps $36 million it would have drawn in from the entire transaction.

Since the control board prevented the deal from closing at the end of April, the government has lost some $5,000 a day in interest income it would have earned on the $36 million offered by Xspand, a company from Morristown, N.J., according to Hartman.

Comptroller Mark C. Poloncarz, who also has lamented the loss of interest income, said the $36 million would have instantly pushed the county's reserve fund beyond the $50 million goal.

*County Hall says it needs the $8.8 million it was forced to give Erie County Medical Center under a federal program that ensures publicly supported hospitals are covered for their losses serving patients who are poor and uninsured.

The county had to surrender the money, even though county officials felt that taxpayer support for ECMC for the rest of this decade was spelled out in a court-approved consent decree reached at the end of 2005.

Hartman and County Attorney Laurence K. Rubin have said the government will return to court to settle the matter, since they have been unable to reach an agreement with the hospital.

Erie County also faces its perennial concerns. For example, the Sheriff's Office's jail division continues to spend millions of dollars on overtime pay for guards to meet state-mandated staffing levels; the county clerk's office needs a safe place for archived records; many suburban lawmakers insist too little is being spent to improve county roads.

There is a sentiment in the Legislature that the reserve fund can patch over problems that might remain at the end of this year, especially now that the auditing firm Deloitte and Touche LLP has confirmed that 2006 ended with a $23.8 million surplus.

"The good news is, from the past couple of years, the county has been able to replenish some fund balance," said Legislature Chairwoman Lynn M. Marinelli, D-Town of Tonawanda. " . . If worst came to worst with some of these fiscal pressures points," she said, "there is still fund balance. That is the last resort."

e-mail: mspina@buffnews.com

There are no comments - be the first to comment