Plans by Erie County Executive Mark C. Poloncarz to amortize $8.6 million in pension payments to help close a $29.2 million gap in next year’s budget dominated discussion Thursday during the Legislature’s first day of hearings on Poloncarz’s $1.39 billion proposal.
The administration wants to take advantage of a state pension-stabilization program that will allow the county to pay only about $32 million of its estimated $40 million state pension bill next year.
The immediate $8.6 million savings would be used to help close the county’s deficit.
Twelve other counties and 177 local governments in the state have taken advantage of the program, Deputy County Executive Richard Tobe said in a presentation before the Legislature’s Finance and Management/Budget Committee.
He called it a prudent approach in the absence of being able to raise more revenues.
“It relieves some pressure on this year’s budget, but that’s not the only reason to do it. We think it makes sense in the long term, also,” Tobe said.
However, some lawmakers said Tobe’s contention is the opposite of what Budget Director Robert Keating said only a year ago on the subject of borrowing on pensions.
“Last year you said that it wasn’t a good idea,” said Legislator Joseph C. Lorigo, C-West Seneca.
“You said, short term, it’s great. You’re getting more money now, then you’re paying more for it in the future. There is no benefit ... I’m curious why the county executive has changed his tune for 2014?” Lorigo added.
Keating said that while the use of recurring revenues would have be the ideal way to balance the budget, it wasn’t an option.
He said projected revenues remain relatively flat, yet the public still wants and expects the county to maintain funding for discretionary services – such as funding to the libraries and for cultural programs – and even enhance them.
“We had the option of using more fund balance, but we felt pension smoothing, in this case, was better. Ideally, recurring revenue is the best solution, but recurring revenue is not there,” Keating said.
However, Lorigo’s sentiments were echoed when Comptroller Stefan I. Mychajliw appeared before lawmakers to talk about his department’s budget and offer his take on the administration’s overall 2014 budget proposal.
“I think he’s right on the money, as far as kicking the can on pension payments,” Mychajliw said, referring to Keating’s comments on pension borrowing from a year ago.
“We would encourage the county executive and this honorable body to listen to Mr. Keating’s comments last year,” Mychajliw added.
When asked by Legislator Timothy R. Hogues, D-Buffalo, for an alternative proposal, Mychajliw replied that it was not the comptroller’s decision.
“You are the policymaking entity, as far as the budget is concerned. The county executive has presented his priorities in this budget, which does include a lot of additional spending,” Mychajliw said.
“The Comptroller’s Office is not a policymaking entity in county government.”
The Legislature’s hearings on the budget will resume at 9 a.m. Wednesday.