Lawmakers criticize $100M ECMC debt refinancing plan

Feb 10, 2017

In a day of complicated maneuvering, Erie County legislators killed a plan to refinance the debt of Erie County Medical Center, then sent back to committee a separate plan to borrow $100 million for the hospital using the county's credit rating. It was a day of attacks - some personal - and so much parliamentary maneuvering regarding the entangled finances of Erie County and ECMC even legislators were sometimes lost.

ECMC owes the county a lot of money and is required to pay it back over many years. A plan to refinance the hospital's debt died in the Erie County Legislature Thursday.

Legislators sent back to committee a plan to borrow $100 million for a new emergency room and major mechanical replacements, while some legal complexities are looked at by the lawyers and the Poloncarz Administration grapples with how to pay an unexpected $18 million in additional subsidy to the hospital.
 

Erie County Executive Mark Poloncarz (2nd from right), stands with ECMC officials, calling borrowing plan "a no brainer."
Credit WBFO's Chris Caya

Poloncarz was not surprised the plan was sent to committee.

"So that we can have additional conversations. That's okay as well," he said. "But I certainly don't want them to reject it. I know there are a number of legislators that have indicated they are going to reject it today. That's disappointing because it makes sense for everyone. I've never really gotten a good reason as to why they would vote no."

However, there is still a financial reality to resolve.

"We're going to have to identify $18 million in cuts elsewhere," said County Executive Mark Poloncarz. "and that's more than 10% of my discretionary spending. That's a significant amount. Everything would be on the table: Roads from the general operating funds, arts and cultural institutions, parks."

The plan to refinance all the hospital debt included a tricky legal step to help solve some of that. Legislature Majority Leader Joseph Lorigo did not like the plan.

"What we need to do here is send a message that the county executive gave us one option to fill this budget gap that he created, not the Legislature, and we're rejecting it because borrowing $188 million to save $18 million only makes sense in government. It doesn't make sense in real life," he said. "It's a scheme. It's smoke and mirrors."

The county executive's plan also drew a blast from County Comptroller Stefan Mychajliw, who said his attack has nothing to do with this being an election year.

"The county executive clearly has a spending problem," he said. "He just purchased a $50,000 Chevy Tahoe, the luxury package, with heated steering wheel. He's added almost $2 million in security measures to the Rath Building. The county executive clearly has a spending problem and he's trying to use smoke and mirrors and Red/Green Budget-like schemes to kick the can of his responsibilities."

None of his comments dealt with what to do about the unexpected $18 million and how it will be paid.

Hospital Board Chair Sharon Hanson said the money is needed for a new emergency room and building mechanical improvements.

"We are operating out of an emergency room right now that was built for 40,000 people," she said. "We're taking care of up to 70,000 people. We need to be more efficient in the manner in which we're taking care of people. That's what this is about."

Legislator Peter Savage saw the fight as an attack on the hospital.

"To simply say I'm not going to support the borrowing because I don't like what we are going to do after the fact, when we realize the savings that we are realizing for them and the points they are paying on the note, to say I don't like the way we are spending those dollars later and not allowing the borrowing go forward today and putting the project in jeopardy is wrong," he said.

It is not clear if the hospital will borrow the cash on its own, although the interest rate would be higher.