Global financial turmoil became a local headache in Orchard Park on Wednesday.
Town Board members struggled to plan basic municipal projects like road repaving in a world where material costs are gyrating, lenders are slamming their vaults shut, and interest rates are anyone's guess.
"It's good to have flexibility in today's market," financial consultant Wayne Drescher said dryly.
The board held its discussion about capital projects on a day when the Federal Reserve made an emergency cut in its key interest rate -- but the stock market fell anyway, extending a dizzying plunge. Meanwhile, oil prices slumped to less than $90 a barrel, perhaps signaling lower prices for fuel and asphalt.
Councilman Mark Dietrick wasn't willing to bet that inflation has reversed course.
"In three years, nothing is going to cost less than it does now," he predicted.
The board decided to take initial steps toward floating a $2.13 million bond to pay for five road reconstruction projects. The work would take place over the next few years on Ellis Road, Short Drive, Iroquois Drive, Lexington Avenue and Puritan Place.
Just how to fund the projects will be decided on the fly.
Rates are high now because fearful lenders are reluctant to open their fists, said Councilman Ed Graber Jr., an attorney and vice president at M&T Bank. That situation could "unclog" shortly if the federal bailout of risky mortgage securities has its intended effect of freeing up credit again.
The town could put bonding authority in place, then put off locking in the terms of a 15-year bond for several months or a year, Drescher said.
He recommended taking bids on bonding and then, if rates remain high, issue a bond anticipation note to put off the plunge into long-term financing. The town can also use available reserves temporarily, to provide additional time.
"We can get the bond resolution in place, then get the bid later," he said.
How much to borrow is also a tricky question, as prices for materials swing with global commodities markets. Sizzling prices for asphalt could be due to cool off, as oil declines from its record prices set earlier this year.
That would be a mixed blessing, council members noted, if the town winds up borrowing more than it needs and pays interest that turns out to be unnecessary. But underestimating costs would leave the projects short of funding.
The tumbling stock market could also deal a blow to the town's budget, Drescher warned. The state pension system may raise its assessment on town employee salaries, in order to compensate for losses in its stock portfolio.
If the town's contribution rate to the pension system -- currently about 8 percent of pay for most tiers of workers -- were to rise just 3 percentage points, the added cost for the town would be well over $100,000.
"When the [stock] market goes down," he said, "there's absolutely the risk that the contribution will go up."