County’s year-end numbers will likely show deficit
Medicaid charges may put ’08 in red
Erie County probably ended 2008 with a deficit, its first in four years.
The government, whose finances have been overseen by a state control board since 2005, had been inching toward a modest surplus for 2008.
But the state Health Department on Tuesday took $6.2 million out of Erie County’s checking account for Medicaid-related charges for Erie County Medical Center.
The charge probably pushed 2008 into red ink — unless the sales tax income from December’s consumer purchases turns out to be unexpectedly high.
While the December total won’t be known for several more weeks, only about half of the New York state retailers surveyed by the Retail Council of New York reported at least decent sales during the final run-up to Christmas.
Erie County’s sales tax proceeds slid in the latter half of the year, and the government is budgeting for no increase in sales tax revenues for 2009. The cities, towns, villages and school districts that share the sales tax money tend to follow the county’s forecast.
A report being prepared by the comptroller’s office will tell legislators next week that the three-year string of surpluses has probably ended. The report will cite softer-than-expected revenues and higher expenses, such as the Medicaid payment and employee overtime. Overtime ran $4 million over budget.
“There is a very distinct possibility, when all is said and done and we close out our financial statements, that we will end up with a deficit,” Comptroller Mark C. Poloncarz said Friday. “It will probably be less than $10 million. But you don’t want a deficit. And a deficit is a deficit.”
It’s not a calamity for a government that spends more than $1 billion a year to end with a deficit of a few million dollars. But county officials would have to pull from reserves when they have been trying to rebuild the reserve fund once depleted by the financial crisis of 2004-05. The revised County Charter also mandates that Erie County hold at least 5 percent of its annual budget in reserve, and officials have not yet reached that mark.
The county’s failure to end the year with a surplus wasn’t for lack of trying. County Executive Chris Collins, through his budget office, had slowed hiring to a trickle and froze other discretionary spending when sales tax income started cooling at midyear.
Collins’ budget director, Gregory G. Gach, also canceled any employee travel plans that were not fully reimbursed by the state or federal governments or were not needed to “fulfill core missions.”
Gach, in his final budget status report for 2008, told the Legislature in early December that he foresaw a $1.6 million surplus but warned that a further downturn in sales tax income could change that. Fuel prices, a major component of sales tax proceeds, already were falling.
In his forecast, Gach said he had not accounted for the potential $6 million-plus payment related to ECMC because it was only rumored at the time. Weeks later, however, the state Health Department alerted Erie County it owed the money, then took the $6.23 million on Tuesday.
The county is required to pay a share of the money that its government-supported hospital loses in caring for the working poor who do not qualify for Medicaid, or who might qualify but never applied.
It is difficult to budget for those “intergovernmental transfers,” as they are called, because they are calculated in Washington and Albany and billed at different times during the year. Still, Poloncarz says he has recommended setting aside money to cushion those surprises.
Collins in recent weeks saved the government $16 million over three years by negotiating away another Medicaidrelated obligation for ECMC. The $16 million involved the county’s share of Medicaid payments for ECMC’s Erie County Home. Collins persuaded ECMC’s board to essentially waive the payment by taking on some of the county government’s other expenses for the hospital corporation.
Gach, while not at work Friday, said through a spokesman that he could not yet determine whether 2008 ended with a deficit.
Spokesman Grant Loomis also mentioned that the 2008 county budget was not a Collins budget. It was “proposed by the previous administration, adopted by the Legislature and reviewed by the comptroller,” he said.
Collins, after his election in November 2007, was invited by Legislature Chairwoman Lynn
M. Marinelli to identify any problems he saw in the proposed 2008 budget and offer changes. Collins declined.
Erie County usually announces its year-end numbers about the middle of the following year, after they are audited by an outside firm. For 2007, the government closed with a $9.3 million surplus. It was about $24 million in 2006, after the government raised its sales tax to 8.75 percent, now the state’s highest. Erie County scratched out a smaller surplus in 2005, about $10 million, after some one-shot gimmicks that year.
This year will be Erie County’s first under a Collins budget. But revenues are still uncertain. The Legislature believes it cut spending deeply enough to do away with the property tax increase Collins wanted. Collins says the Legislature failed, and he intends to raise taxes anyway.
The Legislature has taken him to court. A hearing is set for Jan. 12 in State Supreme Court.
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