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The worst of Erie County government's fiscal crisis will be averted with the lifting of a $50 million burden for this year, officials said.

While problems still loom for 2005, Erie and other counties across New York will enjoy a gift from Albany: no payment to the pension fund this year.

For Erie County, a year-end deficit once projected at $70 million should fall to about $11 million when the pension savings and other budget moves are applied.

Better yet, a Legislature Democrat says lawmakers might be able to wipe out the remaining shortfall before the end of the year.

"As of now, we have not just met, but we have exceeded what the administration asked for in cost savings for 2004," said Legislature Majority Leader Lynn M. Marinelli, D-Town of Tonawanda. "And with the pension savings, we seem to be in balance."

The State Legislature, which reconvened for a few days this week, changed the due date for county and town payments to the state retirement fund from Dec. 15 to Feb. 1 from now on. Gov. George E. Pataki is expected to sign the bill.

For the county and town governments whose budget years follow the calendar year, they have been handed a free year as far as retirement obligations are concerned. The move saves them a total $980 million in 2004, with little effect on the retirement fund except that it goes six weeks without adding that money to the $117 billion already invested for the pensions of public retirees.

Local governments had complained in recent years that the stock market bust of the late 1990s forced their contributions skyward, beyond affordable levels. Budget officials across the state urged Albany to provide relief in several ways, including delaying their December payments to the next budget year.

Erie County had expected to pay $25 million in pension costs from its general fund and $25 million to cover pension payments for retirees from other units, such as the library, the nursing home and Erie County Medical Center.

Budget Director Joseph Passafiume said he can now subtract $25 million from a general fund deficit once projected to hit $70 million by year's end, carving the deficit to $45 million. Then he can subtract $10 million pruned last week when the County Legislature froze spending in several areas, and he can apply a $24 million benefit realized this year from the sale of Erie County Medical Center to a new public benefit corporation. That brings the projected deficit to $11 million, to be plugged with money from reserves, he said.

That's a vast improvement when considering the county had originally planned to pull $35 million from reserves at year's end, under a best-case scenario that quickly unraveled. But Passafiume said the county should strive to avoid the use of any reserve dollars and still wants lawmakers to lay off 85 of the county's 7,000 workers to save more money this year and lessen problems for 2005.

The county continues to spend beyond its means, and must save money or raise taxes, or both, to avoid a deficit projected at $125 million for 2005. Erie County outspent its budget by $10 million in the first three months of this year, largely on personnel costs.

County lawmakers so far have rejected layoffs until they see a mid-year report and are presented a list of employees to be let go that doesn't rely heavily on entry-level staff.

Marinelli, the majority leader, said the Legislature's staff has identified even more vacant positions that if frozen could wipe out the remaining $11 million deficit, but further analysis is needed to see if those positions can indeed remain open. Lawmakers expect to meet during their summer recess to deal with budget issues.


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