Plans for a new Erie County Medical Center emergency department and other improvements cleared a major hurdle this week. The Erie County control board voted 5-1 to borrow up to $120 million on behalf of the hospital. The control board also agreed to refinance other hospital debt to make the new borrowing affordable.
But more hurdles remain. County lawmakers and County Executive Mark Poloncarz are still arguing over whether the borrowing arrangement is a good deal for the hospital and county taxpayers or "a risky credit scheme."
The County Legislature has issued a subpoena demanding the control board appear at a committee meeting before the Legislature authorizes the board to borrow the money.
Meanwhile, Poloncarz has accused Conservative County Chairman Ralph Lorigo of pressuring legislators to vote against the borrowing deal. Lorigo is the father of Legislature Majority Leader Joseph Lorigo, the most outspoken critic of the proposed transaction.
If the hospital can navigate around the politics, ground could be broken for a new trauma center by late summer.
The Erie County Fiscal Stability Authority, the control board's official name, has resisted most efforts to weigh in on the controversy.
Authority President James Sampson said the control board has no intention of appearing before the Legislature to answer questions. The board, as an independent authority, has received legal advice that board members cannot be compelled to appear. Executive Director Ken Vetter has offered to speak on the board's behalf.
"This is pretty straightforward," Sampson said of the borrowing measure. "It's obviously legal. It's within our authority, and we've done it in the past."
Opponents raise concerns
The control board vote was taken over the objections of the Legislature's majority leader and chairman. Comptroller Stefan Mychajliw also opposed the vote, and he accused the board of being secretive and non-transparent, citing the its members' resistance to appear before the Legislature to answer questions about how the borrowing deal might affect county finances.
Opponents of the borrowing deal demanded the control board honor the unanimous resolution of the Legislature to appear before its Finance and Management Committee. Chairman John Mills, R-Orchard Park, not only requested the board's appearance but held up a subpoena he was prepared to issue if members refused to come. That subpoena was served on Thursday.
"The control board is our last hope to make sure we watch county tax dollars," Mills said.
The borrowing deal is currently estimated to save the hospital between $12 million and $14 million in today's dollars, compared with the cost for the hospital to borrow the money through private lenders. County Executive Mark Poloncarz wants the hospital to give those savings back to the county to offset the county's heavy financial burden to the hospital for expenses associated with the care of poor, uninsured and underinsured patients.
Control board member Barry Weinstein, the Republican Amherst town supervisor, was the only member to vote against the deal. He reiterated concerns expressed by some legislators that the borrowing arrangement requires the hospital to pay the county millions of dollars up front in exchange for the county's cooperation in allowing the control board to more cheaply finance their major construction and renovation project this summer.
He and others objected to the use of short-term revenue to defray long-term, recurring county expenses.
'Lot of politics'
Majority Leader Joseph Lorigo said the Legislature received no evidence ECMC can afford the new debt, the control board has done nothing to illuminate the matter, and any county efforts to assist the hospital are eroded by the condition that the hospital give money back to Erie County.
"This isn't a political discussion," said Lorigo, C-West Seneca.
Poloncarz said the opposite is true. He pointed out that Lorigo's father, Conservative Party Chairman Ralph Lorigo, has contacted legislators who previously received Conservative Party support and urged them to vote against the borrowing deal.
"There's a lot of politics behind the scenes, but it's not coming from my office," Poloncarz said.
Ralph Lorigo confirmed that he has spoken with legislators Peter Savage, D-Buffalo, Thomas Loughran, D-Amherst, Kevin Hardwick, R-City of Tonawanda, and Lynne Dixon, I-Hamburg, but said he has not threatened any legislator with the loss of Conservative Party support. Instead, he said, he's encouraged legislators to demand more answers of a deal that could be financially harmful to the county and the hospital.
"In my opinion, this is an important issue to every taxpayer in Erie County," he said.
He also said his son is not involved in these discussions.
ECMC's 'excellent financial health'
Quatroche said the hospital is in excellent financial health and can afford to borrow the money, provide a credit to Erie County, and remain fiscally sound. Both he and Poloncarz stressed the symbiotic relationship between the public hospital and Erie County government.
"Our track record has indicated we know how to financially manage our hospital," Quatroche said. "We have had seven years of surplus, profit. We continue to be in one of the strongest positions of any public benefit corporation in New York State."
The control board's vote to borrow the money still requires the County Legislature to pass a "declaration of need" that would give the control board permission to borrow on ECMC's behalf. That vote is expected to be taken next week.
Opponents of the borrowing deal hammered the control board for voting on the matter without thorough public discussion. Though the control board meeting was held in public, board members did not ask questions of anyone opposed to the deal, nor did they actively discuss or debate the borrowing resolutions they ultimately approved. Board members have previously exchanged emails about the matter, however.
Mills dismissed the control board's public meeting as a "listening session," not a true airing of the issues.
Sampson said the issue of ECMC payments to Erie County is a policy decision to be decided by the county executive, the Legislature and the hospital. He also said, after the meeting, that control board members will scrutinize how Poloncarz makes use of any one-time revenues from the hospital when they review the county's four-year financial plan, which has yet to be submitted to the control board for review.
Board members did use their speaking time to criticize a prior Buffalo News story, which reported that the control board reached out to the hospital and offered a plan to borrow $100 million for ECMC over 22 years and to make that debt service affordable by refinancing the debt for ECMC's Terrace View Long-Term Care Facility. Board members said that information was inaccurate.
In fact, it was correct.
Quatroche clarified Wednesday that the hospital initially reached out months ago to both Erie County and the Erie County control board for financing assistance. But when the original, 30-year borrowing proposal with Erie County was voted down by the Legislature, it was the control board that reached out to the hospital to propose a restructured borrowing deal for a shorter 22-year term and modest refinancing of existing debt.