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Control board rebuffed on loans County Legislature says no to borrowing

Erie County lawmakers refused Thursday to let the state-appointed control board expand its role by borrowing the money needed this year for major projects, meaning millions of dollars for upgrades at the Buffalo Zoo, Erie Community College and Ralph Wilson Stadium will be delayed for weeks or months.

Legislators, particularly those in the Democratic caucus, showed every sign that a stalemate with the control board will linger into 2008 and the arrival of the next county executive, Christopher C. Collins.

Lawmakers see the board, created in 2005 to stabilize county finances, as arbitrary and out to borrow money only to ensure that it exists for the decades it will take to repay the debt.

Control board members two weeks ago refused to let Comptroller Mark C. Poloncarz, also a Democrat, arrange the $52 million loan, insisting they will handle the deal using their own stable of lawyers and financiers.

After spending about $50,000 in county tax dollars, laying the groundwork to borrow money, the control board needs a request from the county executive and the Legislature. While Joel A. Giambra has relented, the Legislature refused to act on the matter Thursday during one of its final sessions of the year.

Democratic and Republican lawmakers instead invited control board officials to sit before a committee to prove their claim that they can borrow more cheaply than Poloncarz can and that doing so makes long-term sense.

"If they don't come in, we can subpoena them, because we have that power," said Legislator Michele M. Iannello, D-Kenmore, whose remark during a freewheeling discussion before the formal session typified the mood of most lawmakers.

"They have been very unreasonable to this legislative body," said Legislator Robert B. Reynolds, D-Hamburg, chairman of the Finance and Management Committee. "I am sorry for those organizations that have not gotten their money," he added later.

The zoo needs the $4 million that county officials had pledged for the South American Rain Forest Exhibit. But the organization took out its own loan to pay bills until it collects on the county's promise. Director Donna M. Fernandes said the zoo must pay $28,000 a month in interest it had not budgeted.

Erie Community College needs about $3 million for its North Campus heating plant.

"Sidewalks are closed and torn up with yellow caution tape blocking certain areas," interim President William D. Reuter said in a letter to county officials last month. "Steam is being released from the multitude of leaks."

The Buffalo Bills expect the full $5 million they need to pay Mitsubishi for the high-definition scoreboard installed at the start of this season. The county so far has advanced the roughly $2.5 million it borrowed last year for half of the project.

Contacted after the Legislature's vote, control board Vice Chairman Robert Glaser said he is willing to go to lawmakers with more information.

"If they request us to come over there, and we could plan an appropriate time to do this, and this would help their decision along, we would do that," he said. "We would try to get them to understand the analysis."

Lawmakers also voted, 13-1, to request the state attorney general or the governor's Commission on Public Integrity to investigate Poloncarz's allegation that a control board consultant had undermined him in getting a good price on bond insurance.

Poloncarz said Richard Tortora of Capital Markets Advisors may have persuaded certain insurers to drop their offers in an effort to prove Poloncarz's deal would be more expensive.

Glaser had promised an investigation by a control board lawyer and revealed Thursday that it has begun, with a letter sent to Attorney General Andrew M. Cuomo, inviting his office to join the inquiry.

It is unlikely the Legislature will ever buy the argument that the control board should handle the next loan. Lawmakers harbor the remote hope that state leaders will someday dismantle the Fiscal Stability Authority if Erie County continues to balance its budgets. But it would be almost impossible to dissolve a state agency that still owes lenders. So lawmakers argue that the total cost of control board operations over 20 years, perhaps $14 million, should be in the equation.

The control board rejects this notion. The state panel has other useful duties besides borrowing money, member Kenneth Kruly said recently. No one is adding the cost of comptroller's office over 20 years because it has other functions, he argued.

Eleven of the 15 lawmakers were not in office during the height of the 2004-05 budget crisis that brought on a state control board, and those newer legislators have chafed under the control board's tightening grip on county operations, especially given its puzzling moves.

For example, when the county wanted to sell its tax liens, the control board sent officials back to Square One for a new round of bids that came in $7 million worse than the first. When the county wanted backup for an arbitration hearing with patrol deputies, the control board refused to show.

In January, the control board predicted a potential $15 million budget deficit, so it remained a "hard" board that can reverse the decisions of elected leaders. The government is on pace to end 2007 with a surplus.

Not all lawmakers thought it wise Thursday to rebuff the control board, though the decision was solidly approved.

Chairwoman Lynn M. Marinelli, D-Town of Tonawanda, saw in 2004 the troubles that arise from legislative gridlock. She urged lawmakers Thursday to accept the reality of the control board's upper hand and let it handle the loan to protect those groups that need the county's millions.

"I am realistic and pragmatic enough to know that we are at an impasse," she said.

"It is up to this house to break the gridlock."


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