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$16 million left out of county budget State says money is owed to ECMC

County Executive Chris Collins has been keeping a $16 million secret that muddies next year's Erie County budget and the four-year plan he gave the state-appointed control board.

Here's the issue: The state Health Department in September told Erie County's budget office that it owes Erie County Medical Center and its Erie County Home $16 million more than expected in Medicaid-related charges.

Collins didn't include the obligation in the budget he delivered to the Legislature on Oct. 15. Nor did he mention it in the four-year forecast.

"It's a serious matter," said County Comptroller Mark C. Poloncarz. "Right now, his budget is out of balance. Why they didn't include it, I don't know."

Collins acknowledges that his "neck is stuck out there a little bit." But he's confident his fix will come together.

"The county comptroller," he added, "has no role to play in this."

Not everyone agrees that a solution is at hand. But a smattering of county lawmakers interviewed Tuesday said they expect to make sure the $16 million issue does not trigger a larger property tax increase.

They still intend to shrink or eliminate the 3.6 percent increase in the tax rate that Collins proposed -- before the $16 million surprise.

Poloncarz learned about the $16 million problem through a back channel. He alerted the Legislature on Friday and wrote Collins an angry letter chiding him on his "highly irresponsible" actions.

Collins had kept the matter quiet because he was negotiating with ECMC's board of directors and the acting chief executive officer, Jody Lomeo, to persuade the hospital to essentially forgive the payment.

Collins and his budget director, Gregory G. Gach, have said the sides are close to an accord.

That's news to ECMC.

"We have not made an agreement," said Sharon Hanson, an ECMC board member who is involved in the discussions. She added that it might be "illegal and inappropriate" to make such a deal with Collins.

ECMC has not flatly refused, Lomeo said. But he said he asked Collins to provide a legal opinion supporting his contention that hospital directors can waive the payment yet meet their fiduciary duty and comply with federal guidelines governing Medicaid.

Collins has hired a legal expert on Medicaid to write the opinion. It's expected around the middle of November, which provides little time for the matter to be ironed out before Nov. 24, the date lawmakers plan to vote on a budget.

Poloncarz predicts that unless the budget contains a way to pay the debt, it will have a deficit the day it takes effect -- Jan. 1.

Erie County need not pay the entire $16 million next year. Because it was built up over three years, the state Health Department will let Erie and other counties in the same pickle pay their bills between now and March 2011.

Gach told the state Health Department that Erie County will make three installments, in March 2009, March 2010 and March 2011. So the county's net costs would hit $5.3 million a year for each of those years.

However, Gach said he's still hoping that by March ECMC will forgo the payment by giving Erie County credit for the other support it provides. For example, County Hall next year will continue to repay millions in hospital debt, while the hospital sits on tens of millions of dollars in county aid not yet spent.

In past years, ECMC and other government-supported hospitals submitted to side deals that softened the Medicaid blow to their sponsors. But the federal government has sought to end the practice. In this climate, ECMC directors believe they cannot forgive the $16 million because it's supposed to pay for care at the hospital in Buffalo and the nursing home in Alden. Collins, however, says he will have a deal with ECMC as soon as his legal expert provides the opinion.

Erie County's budgetmakers aren't happy that Collins kept the matter hidden while claiming that his budget needed "no smoke and mirrors."

"So much for 'no smoke and mirrors,' " said Legislator Robert B. Reynolds, D-Hamburg, vice chairman of the Finance, Management and Budget Committee. "There's a lack of transparency in this budget."

The control board will meet Monday to discuss Collins' budget and four-year plan.


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