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Erie County Medical Center projects caught in funding dispute as lawmakers oppose borrowing with 'so many unknowns'

The Erie County Medical Center board of trustees has asked the county to borrow up to $188 million to help pay for a new emergency department and other capital projects at the hospital, as well as to refinance leftover debt from the construction of ECMC's nursing home.

But hours after the board acted Thursday, four legislators in the County Legislature - including the chairman and majority leader - announced they oppose the plan as outlined by Erie County Executive Mark C. Poloncarz.

Under Poloncarz's proposal, the county would borrow the money on the hospital's behalf because it can do so at a lower interest rate, but ECMC would pay off the loan. ECMC would apply the interest savings as a credit toward the tens of millions of dollars the county owes the hospital in payments for indigent care in upcoming years.

Even with Poloncarz's borrowing plan apparently dead in the Legislature, the county executive's 2017 budget, unveiled Friday, didn't include any additional money for the hospital.

"There's no good plan B," said Robert W. Keating, the county's director of budget and management.

Under federal law, Erie County must pay ECMC for care of the poor and underinsured at the hospital and nursing home. The county budgets $16.2 million annually for those payments. But the county often owes tens of millions of dollars more, with little advance notice.

The payments are calculated by state and federal governments, and the county matches federal dollars. The county already has paid $27.1 million this year, Keating said. But county officials don't know if they'll have to make another payment for 2016. The bigger concern, county officials said, is for 2017, 2018 and beyond.

That's where the county executive, a Democrat, came up with the idea of serving as ECMC's banker, essentially, and using the interest savings as a credit to apply toward the looming indigent care payments.

However, members of the County Legislature's Republican-backed majority, along with Republican County Comptroller Stefan Mychajliw, raised concerns about the plan, saying they had been left out of discussions among the county executive's office and ECMC officials over the proposal. They also said combining the hospital's borrowing needs with the county's payment obligations was irresponsible.

ECMC's trustees were obligated to ask the county to borrow on the hospital's behalf before the measure could go before the Legislature. The resolution asks for $100 million for new capital projects, led by a $45 million emergency department, along with millions more for new energy projects and improvements to the building's exterior. Another $88 million would go toward converting the remaining debt on its Terrace View Long-Term Care Facility, which opened in 2013, to a 30-year loan

Eight members of the 11-member Legislature must approve any borrowing. But the four members who signed the letter sent to Poloncarz on Thursday afternoon - Chairman John Mills, Majority Leader Joseph Lorigo, Legislator Edward Rath and Legislator Ted Morton - say they won't support the borrowing proposal, leaving the plan with bleak prospects.

“The issues facing ECMC are many. At this time, the county should not be borrowing this money with so many unknowns and absolutely no reasonable guarantees that ECMC could even make the payments to repay the $188 million loan," Lorigo, a West Seneca Conservative, wrote in a statement.

ECMC officials are caught in the middle of the county fight.

"With ECMC Corporation's sound financial position and as fellow taxpayers, we continue to be committed to ensuring both the payments for any borrowing and the debt for these projects is paid by and backed by the ECMC Corporation - not county taxpayers," Peter Cutler, an ECMC spokesman, said in a statement. "It is important for the patients of Western New York that our new ER and trauma center move forward in the next month, and we look forward to hearing the Legislature's collaborative solutions to ensuring this becomes a reality.  We will continue to provide any and all information that will be helpful."

The county executive's budget for 2017 includes the $16.2 million indigent care payment for ECMC, but nothing extra. Keating said the alternatives to the county executive's plan aren't appealing.

"You'd be taking it out of reserves, or - there's just no good solution," he said.

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