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Comptroller is critical of Giambra's fiscal plan Hartman says taxes should rise even higher

Erie County's comptroller said Wednesday that Joel A. Giambra's four-year plan fails to guide the government to solid financial ground and suggested that lawmakers raise taxes more dramatically than the county executive has proposed.

Interim County Comptroller James M. Hartman said that if Giambra's two-year increase of about 50 percent in the property tax can be delivered in one blow, for 2006, or mixed with a higher sales tax rate of 8.5 percent, he could avoid deficit financing for next year and even begin to restore reserves.

Hartman also took one of the county's first shots at the state-appointed financial control board, saying that its leaders pushed deficit financing into Giambra's four-year plan but that one of the members then criticized its inclusion.

Aiming at the control board more than Giambra, Hartman reminded the panel that its "review and comment period" doesn't start until Oct. 1, after the Legislature decides whether to accept Giambra's proposal.

"I believe in a simple principle of government finance," Hartman said in a letter to lawmakers, who had sought his thoughts on the plan Giambra unveiled Tuesday. "Revenue should pay for expenditures until such time as those expenditures can be firmly, unequivocally reduced."

Hartman said that this explains why five years ago, as a private citizen, he publicly objected to the 32 percent tax cut that Giambra and the Legislature engineered and that laid the seeds for the current crisis -- too much money going out, too little coming in. Hartman said that it also explains why he objects to deficit financing, which is fast becoming one of the thorniest aspects of Giambra's proposal, as worrisome as the tax increases.

It is a loan intended to keep the government's head above water, like a charge to the credit card to pay household expenses years into the future. But deficit financing straps taxpayers with a long-term debt while providing little or no benefit -- no new parks, roads or bridges, no new services.

Two legislators, Democrat Albert DeBenedetti of Buffalo and Republican Charles M. Swanick of Kenmore, want to raise the sales tax again to lessen the need for deficit financing, which they say pushes today's pain to future generations of taxpayers and legislators. Control board member Sheila K. Kee weighed in, too, saying that deficit financing is not the best way to stabilize Erie County.

Giambra, who had called deficit financing a last resort, said he included it as a way to buy time until money-saving reforms can kick in, such as melding several human services-related departments.

By agreeing to borrow $46.5 million for 2006, Giambra kept the property tax increase at 25 percent, which adds about $115 a year in taxes on a home assessed at $100,000. He would follow that with a 24 percent increase in 2007.

He and his aides say they are "restoring" the tax to its level in 1999, the year before Giambra took office.

Control board Chairman Edward V. Regan advocated deficit financing, as did the PFM Group, the control board's financial consultant. Regan, a former Erie County executive and state comptroller now living in New York City, has said it is unfair to expect taxpayers to bail the government out of its troubles and that he wants to limit their burden.

"Joel's plan is worthy of support, strong support," Regan said Wednesday after seeing Hartman's letter.

"It keeps the focus on restructuring for his administration and future county executives. The key to that is deficit borrowing. Without it, we are back to where we were years ago," Regan said, agreeing that taxpayers would face the specter of huge tax increases.

Hartman sees problems with that thinking. He calculated that $46.5 million borrowed for 2006 would cost the government $66 million over the loan's 13-year life. It would constrain officials' ability to borrow for more legitimate needs, he said, and hold back the county's credit rating.

Wall Street's ratings agencies have sunk Erie County's bonds to one notch above junk status.

One of Hartman's ideas, raising the property tax by $80 million next year, would expect the owner of a $100,000 home to pay about $240 more a year.

Or, Hartman says, the sales tax could go from the 8.25 cents it rose to on July 1 to 8.5 cents on the dollar. If that happened, the owner of that $100,000 home would pay about $160 more a year.


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