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Run Government Like a Business

Like a bankrupt business: Collins breaks county charter, writes crappy budget

Erie County Executive Chris Collins

On Tuesday the Erie County Fiscal Stability Authority rejected the county executive’s budget for next year and his four-year financial plan.

Small wonder. Both documents were horrible pieces of accounting. Here are some lowlights:

• Collins counts $26 million in uncollected tax liens as cash in hand, even though those debts to the county are uncollected and there is no mechanism in place to collect them. This is like the man who looks up at the night sky and claims to own the moon. Don’t buy it. Generally accepted accounting principles forbid listing uncollected tax liens an received revenue.

Collins wants to claim the $26 million in debt as an asset because that allows him to inflate his reckoning of the county’s fund balance—the rainy day money, which is supposed to total five percent of the county budget. If he inflates the projected fund balance at the end of 2009, then he can dip into the kitty next summer to pay for the inevitable budget shortfalls.

• Why are shortfalls inevitable? Because, for one thing, Collins assumes no drop in state aid to the county compared to last year. But Governor David Paterson expressed in August his intention to cut aid to counties by six percent. In August that seemed merely heartless. In November, in the wake of a Wall Street meltdown that turns the state’s budget crisis into a fiscal catastrophe, a severe cut in state aid to municipal governments seems inevitable. Count on a six percent cut when the state legislature hears Paterson’s plea later this month. The county receives about $200 million in state aid each year, so that could amount to a $12 million shortfall.

• Collins also budgets less than he needs to pay overtime for the Erie County Sheriff’s Department’s oversight of the Erie County Holding Center. Overtime costs there are typically in the $10 million range, and Collins has allowed only $6.725 million for overtime.

The consequences of failing to staff the Holding Center adequately are potentially grave: For years, the New York State Department of Corrections has waived various regulatory requirements that apply to the Sheriff’s Department’s management of the facility, so long as the Sheriff’s Department adequately staffed the Holding Center. Those requirements are met by means of overtime. If those requirements are not met, Department of Corrections could force to county to build a new holding center and to hire new staff. That, too, would seem cruel of a state agency in today’s dire budgetary climate, but, as Erie County Comptroller Mark Poloncarz said, “You never know what the state’s going to do.”

• And then there’s that $16 million debt to ECMC that has made so many headlines in the last week or so. The New York State Department of Health informed the county executive’s office in late September, and possibly as early as August, that the county owed ECMC $16 million, which could be paid over the course of four years. Collins, though required by the county charter to share revenue and expenditure projections with the county comptroller no later than October 1, kept that $16 million expense under his hat. It appeared neither in his 2009 budget, though it turns out he has agreed tentatively to begin paying down the debt in March 2009, nor in his four-year plan.

Here’s passage in the county charter that Collins broke:

On or before the 1st day of October the county executive shall submit to the comptroller all revenue estimates and expenditure estimates for Medicaid, public assistance, and pension contributions and health care insurance costs for county employees to be used in the proposed budget. The comptroller shall review all revenue estimates and expenditure estimates for Medicaid, public assistance and pension contributions and health care insurance costs for county employees to be used in the proposed tentative budget prepared by the county executive and submit to the Legislature in writing by the 15th of October a report indicating whether or not such estimates are suitable estimates for the upcoming fiscal year. Should the comptroller determine that any such revenue or expenditure estimate is not suitable for the upcoming fiscal year, the Legislature, upon notice from the comptroller may revise any such revenue estimate downward upon a two-thirds majority vote and may revise any such expenditure estimate upward by a majority vote. The Legislature shall not revise any such revenue estimate upward.”

On top of omitting mention of a $16 million liability, the revenue and expenditure estimates provided to the comptroller by Collins’s office did not include an estimate of next year’s property tax levy.

Tim Callan, Poloncarz’s deputy comptroller, said that the county executive’s budget director, Greg Gach, sent his revenue and expenditure projections to the comptroller’s office late in the afternoon on October 1. But he would not provide an estimate of property tax revenues. That is the second largest revenue stream in the county budget—the largest, if you leave aside that portion of the sales tax that is distributed to local governments. An analysis of the budget is difficult to complete without that hefty slice of the pie chart.

Gach argued the charter does not require that he provide the comptroller with an estimate of property tax revenues. That may be technically so, but Joel Giambra’s budget director last year provided an estimate of property tax revenues by October 1. Why wouldn’t Collins oblige this year?

According to Callan, the county executive asserted that the property tax levy is not a revenue source until the budget has been adopted. (Because who knows? Maybe the legislature will raise taxes, lower taxes, abolish taxes forever.) Still, Giambra’s budget director managed to conjure some numbers by October 1 last year, and surely Collins’ budget director had working figures to offer. Was Collins holding off on disclosing a proposed property tax increase as long as possible? Was Collins cutting Poloncarz out of the loop because he views him as a political rival? Did he hope to go directly to the legislature with his budget before a third party could cast a critical eye on it?

Last Wednesday, Poloncarz released an analysis of Collins’ first budget. (You can download a copy at AV Daily at Artvoice.com.) At a hearing in the Erie County Legislature regarding Poloncarz’s review, Erie County Attorney Cheryl Green explained that negotiations with ECMC regarding that $16 million debt were “highly confidential” and expressed dismay at the “media parade” Poloncarz had invited by revealing the debt to the public and to legislators. She called him “irresponsible” and found it “disturbing” that legislators were asking for “the details of private negotiations.”

“Cheryl, this is government,” Kathy Konst replied. “I have a problem that this legislature has been kept in the dark…we are owed this information.

geoff kelly

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