If Erie County is to avoid another of its periodic budget crises, it must now find a compromise solution to the borrowing needs of Erie County Medical Center.
After the County Legislature’s failure Thursday to muster a “super majority” vote approving $100 million in borrowing for the hospital’s capital needs, County Executive Mark C. Poloncarz was already looking to one lawmaker for an answer.
Edward A. Rath III, he told a hastily assembled news conference late Thursday, may yet provide the crucial eighth vote needed in an alternative borrowing method offered by the county’s financial control board.
“Legislator Rath has the ability to bring this home,” Poloncarz said of the Williamsville Republican. “He’s the one willing to negotiate.”
The Legislature voted Thursday, 7-4, in favor of the borrowing legislation. But the measure failed because of the requirement for a two-third majority involving major bond issues.
Poloncarz warned that he can't count on the “credits” extended by ECMC to help fill a projected $18 million hole in the county’s budget, stemming from ECMC payments for indigent care.
He must now plan for significant cuts in discretionary spending in areas such as cultural organizations, parks, roads and senior services.
But, he is also clearly seeking an agreement with the GOP-dominated Legislature.
“If a compromise can still be reached utilizing the Erie County Fiscal Stability Authority as a borrowing mechanism,” Poloncarz said, “I am still willing to work to reach an equitable agreement for all. I hope at least one member of the Legislature who voted against the proposal today is willing to do the same.”
Rath was not available after the comments by Poloncarz. But, he noted during earlier floor debate that his “no” vote stemmed from a county-sponsored borrowing plan that was “risky, expensive and uncertain.”
“The control board is the lowest cost bank on the street,” he said. “It needs to be considered for the long term financial obligations to the citizens of Erie County...and the hospital.”
Poloncarz appeared to be moving in that direction, too, and is hoping for a new plan hinging on the control board’s bonding ability.
He noted late Thursday that the original plan called for bonds to finance a new $45 million emergency room and other projects based on the lower 30-year rates offered through the county. But while the control board by statute will exist only for another 22 years, the approximately $500,000 in additional debt service through its bonding capacity now appears the only alternative acceptable to the hospital.
“It’s more than ECMC wants to pay in annual debt service, but they can afford it,” Poloncarz said.
The hospital late Thursday hinted at willingness to explore that option also.
“We look forward to continuing discussions with the county executive, the Legislature, and the Erie County Fiscal Stability Authority to explore other potential funding options,” ECMC said in a statement. “As to not delay the project further, ECMC will also immediately begin the process of seeking other forms of public and private financing that are used similarly by fellow hospitals and medical centers.”
But, in the Legislature, there were still concerns.
Majority Leader Joseph C. Lorigo, C-West Seneca, who led the effort against the Poloncarz plan, fears the county executive will apply the “credits” afforded by ECMC to a “one-shot” fix of his current budget problems.
Though Poloncarz said he opposes using up the credits in the short term, Lorigo insisted Poloncarz is eyeing the dollars to balance the 2017 budget.
“In case he was unaware, that was exactly what his borrowing proposal with ECMC did,” Lorigo said. “It used one-time credits to pay for ongoing intergovernmental transfer payments. The only way to solve this budget issue is by changing how we operate.”
Lorigo labeled the borrowing plan as a “scheme to plug a budget hole.”
“We were told time and time again we could afford [proposed spending],” Lorigo said. “We can’t.”
The situation exploded into a major confrontation over the past few days, as legislative Republicans accused Poloncarz of bullying cultural organizations into lobbying for his borrowing plan or face losing some of their county funding.
Throughout Thursday’s debate, Lorigo and others called it a “bad deal for taxpayers” because of their contention that the county executive would soon use funds for his immediate budget problems.
“The borrowing and credit it entails is fraudulent,” said Legislator Ted Morton, R-Cheektowaga. “I have no problem borrowing through the control board, as long as there is no kickback to Erie County.”
Two members of the Republican caucus ‑ Lynne M. Dixon, I-Hamburg, and Kevin R. Hardwick, R-Tonawanda – joined Democrats in the vote. They echoed Buffalo Democrat Peter J. Savage III in arguing that the county plan offered the best deal.
“I feel much more confident in this much more affordable manner at a much better interest rate,” Savage said.
The county must draft new legislation based on what appears to loom as borrowing under the control board auspices. Poloncarz estimated a solution must be agreed upon within the next month.
Also Thursday, the Legislature unanimously approved the appointment of Erie County Democratic Chairman Jeremy J. Zellner as Democratic elections commissioner.