In Western New York, public interest in local government spending has usually peaked when there is a crisis on the horizon and diminished when it seems that everything is business-as-usual. When there is the potential for major increases in taxes or for significant cuts in services, people pay attention. Otherwise, not so much.
This is theoretically true of all governments and agencies in the area. The City of Buffalo has certainly had more than its share of attention and fiscal crises. With a lot of hard work, with major state assistance, and for the past 12 years a state-imposed financial stability authority hovering over them, the Mayor, Common Council and City Comptroller have gotten things under control. Heck, Buffalo even played banker to the West Seneca School District a few months ago, loaning the school system money on a short-term basis.
The towns and villages plus the cities of Lackawanna and Tonawanda collectively raise and spend millions of dollars, but it is a rare time indeed when much attention is directed toward them.
Other public institutions with multi-million budgets such as Erie Community College, the Erie County Water Authority and the Erie County Medical Center have usually flown under the radar with their spending. There is a lot to focus on in those institutions, and Politics and Other Stuff will spend some time on that in 2016.
And then there is Erie County government itself. Most folks around here have at least a passing memory of County Executive Joel Giambra’s infamous “red-green” budget of 2005. Fewer are likely to remember the major county budget meltdowns in 1976 and 1984. In many respects, those previous crises were as bad as or worse than 2005.
The real difference between 2005 and the earlier fiscal disasters was that in 2005 the state stepped in and imposed a financial stability authority, aka control board, on the county. Like other control boards in the state, the Erie County Fiscal Stability Authority (ECFSA) was given broad direct and optional powers to monitor and in some respects manage the finances of the county.
A few months into the ECFSA’s existence, in January 2006, I became a member of that board, recommended by Comptroller Alan Hevesi and appointed by Governor George Pataki; a heck of a combination! I had been an active participant and observer of county government for a long time, first as a member of the County Legislature staff in the 1970’s, and later as budget director under County Executive Dennis Gorski.
As part of the review of county finances in 2005, the ECFSA had hired a consulting firm to review finances and recommend solutions. When I joined the board we decided to run with their reports to see where the opportunities and problems were to get the county back on an even keel.
We ran a number of public hearings during the course of 2006 under the leadership of Chairman Anthony Baynes to examine those things, meeting much more regularly than most such agencies. We concluded that the best way to make sure that things were being done properly was to convert the ECFSA from an advisory board to one with some direct control over county finances. We became a “hard” control board. It was probably the first time in New York State that an un-elected board of appointees, on their own action, took control of a local government’s finances in that way. The New York City, Yonkers, and Buffalo control boards were born as “hard” boards.
We continued to aggressively review and occasionally modify county fiscal actions through the spring of 2009. All county contracts over $50,000 required ECFSA approval. Understandably, County Executive Giambra and later County Executive Chris Collins were not too happy with the level of control imposed by the board.
Eventually, with taxes raised, spending and borrowing controlled, and the authority of the county over fiscal matters restricted by changes in the County Charter (I served on the Charter Revision Commission for a time too), things got better.
Things have continued to improve over the past six years. Property taxes have stabilized. The fund balance is large. The county has become heavily dependent on its sales tax revenues, which is not a positive development. The county also caught some breaks on Medicaid payments, which were reined in for the counties by the state. Medicaid is still one of the largest portions of the annual county budget.
The difficulties which county government experienced in 1976, 1984 and 2005 were driven both by the highly competitive political atmosphere that county budgeting encouraged as well as circumstances not in the county’s control, such as national recessions. Those factors remain a cautionary tale for county government going forward. A more balanced local economy makes major spikes in social service expenses, such as followed steel plant closings in the 1970’s, a less likely occurrence. But things like the national and local economy and the Canadian dollar have and will continue to have an impact on a county government that has grown heavily dependent on sales tax revenues.
All-in-all, however, County Executive Mark Poloncarz and other county officials deserve credit for stabilizing the county’s finances. The County Executive and Legislature appeared to be seriously interested in keeping it that way.
Which brings us back to the Erie County Fiscal Stability Authority. I have been off that board for five years now. The board meets occasionally but doesn’t make news, and that is generally a good thing. Changes in county operations encouraged by the ECFSA have saved the county millions of dollars, as has the borrowing that the board has done for the county with its better interest rates. Millions more flowed to the county through state efficiency grants that the board administered.
Executive Director Ken Vetter and his staff have done a good job, but for now there is not much of a job to do. The ECFSA is scheduled to receive $495,000 from the county in 2016. There are better uses for that money.
Speaking from my experience in county government and on the ECFSA board, I do not think that it is appropriate at this time to abolish the agency. That could not be done anyway at least until outstanding bonds that were sold by the authority on the county’s behalf are retired.
It should be possible with some legal creativity to morph the ECFSA into an agency in the background, ready to step in or assist if necessary. Current law requires the authority to continue through 2039.
That is a little too far for a crystal ball to work. But what should happen now is the board should continue to meet once or twice a year. A single staffer should be sufficient. Some sort of trusteeship arrangement should be set up with a bank or some other financial institution to do whatever needs to be done to follow through on existing bonding and management of sales tax transfers. The county bond rating has improved and differences between what the county and the ECFSA could sell bonds for are diminished. The county government, unless things change in a significant way, can do their own borrowing.
The Erie County Fiscal Stability Authority has served a good and useful purpose for the community, but that is not a justification for it to continue as a fully staffed public agency. Time to say job well done, but let’s move on.