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County's Borrowing Could Cost Taxpayers Nearly $1M

3:23 PM, Jun 12, 2012   |    comments
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BUFFALO, NY- Erie County is looking to borrow $24 million for a capital improvement package and get back into the credit markets. But, in this "You Paid For It" story, just how it is borrowing that money could cost taxpayers a bundle.

$859,800 of taxpayers' money is at stake. Erie County Legislator Kevin Hardwick (R- 4th District) says citizens can't afford to lose it.

 

"We can use it for county functions, for people, for sheriff deputies, for roads, or cultural," said Hardwick. "When taxpayers find out what's at stake, they would and they should, go ballistic."

 

The County Executive has determined that Erie County should reenter the credit markets after a six year absence. The legislature voted to allow the county to borrow more than $24 million for the 2013 capital improvement package.

 

If the Erie County Fiscal Stability Authority, or Control Board, does the borrowing, rather than the county itself, it would save taxpayers nearly a million dollars, but Mark Poloncarz is holding back.

 

"He concludes that we should go with the county doing its own borrowing so the county can get a better credit rating, which I'm not sure is the case. I just think that wishful thinking," said Hardwick.

 

Erie County has an A bond rating on the Fitch Ratings scale, putting it in the Upper Medium threshold. Hardwick contends even if the county did get a better credit rating it would still never be as good as the Control Board's High Quality AA+ bond rating.

 

"The Control Board is here until 2039 by statute. Rather than fighting them we've got to embrace them," Hardwick said.

 

Two On Your Side wanted to sit down with the County Executive and ask him some tough questions. Why would he be willing to waste nearly a million dollars of taxpayers' money? How could he guarantee that doing it his way would actually increase the county's bond rating? Is it even worth the money?  His spokesperson said he wasn't available for an on camera interview and they would only send us a statement.

 

When we did get the statement, it didn't come from Mark Poloncarz, but from the Deputy Budget Director, Timothy Callan. The statement in full is as follows:

 

"Under the Republican legislators' partisan rationale, every local government and school district in New York should have their own individual control board, at taxpayer expense, to conduct borrowing.

The County Executive has determined that Erie County should reenter the credit markets after a six year absence and has met with ECFSA officials to explain his decision; we enjoy a good working relationship with the ECFSA and are glad that they unanimously approved our first four-year plan. It becomes harder and harder for the County to receive future credit rating upgrades while the control board continues to borrow for the County.

We are discussing spending approximately $66,000 a year over 13 years in order to rebuild the County's credit rating. The County Executive is committed to improving the County's long-term financial outlook."

The Legislature's Republican Caucus sent this letter to County Comptroller David Shenk Thursday saying, "...if you choose a more costly option to borrow on behalf of county...you have violated your fiduciary duty to the taxpayers. As a caucus, we are prepared to do whatever is necessary to protect the taxpayers of Erie County to prevent your needless pursuit of wasting taxpayer dollars."

 

 

 

We reached out to the comptroller but our calls were not returned Monday night. The Control Board's Executive Director, Ken Vetter, told us he wasn't available for an interview. The Legislature's Finance Committee meets on Thursday and this topic will certainly be a focus of the meeting.

 

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