EC Comptroller defends deficit declaration, while some lawmakers say wait for feds

May 14, 2020

Democrats among the Erie County Legislature are calling Comptroller Stefan Mychajliw's declaration of a budget deficit "premature" and even a "power grab," while his office says making such a declaration was their duty under the county charter.

On May 4, Mychajliw announced he was declaring the county to be in a fiscal deficit, citing Section 2511 of the Erie County Charter. He anticipated sales tax revenues, as the result of the COVID-19 pandemic and the resulting suspension of many businesses, would fall approximately $128 million short of projections. He estimates the overall revenue shortfall to exceed $206 million.

Credit WBFO file photo

As part of the declaration, his office gave County Executive Mark Poloncarz seven days to present a remedy plan to the Legislature. Poloncarz, who called Mychajliw's declaration "premature," instead issued an executive order giving himself 23 more days to complete that plan. He has also ordered his department heads to prepare plans for cutting their offices by about 13 percent.

Arguments that the deficit declaration was made too soon continued during a lengthy online meeting of the Erie County Legislature's Finance and Management Committee. The harshest criticism came from Legislator Jeanne Vinal, who called the move a "power grab" and one to give the Comptroller's Office some attention. She, and other Democrats in the Legislature, say there is also pending federal relief which could counter losses.

"I ask you to reconsider and please consider the ripple effects to the economy by your outrageous actions to reconsider and withdraw it today, and to put the county ahead of a political party and withdraw it today, so that we don't have the negative ripple effects of what your, what the controller is trying to do," Vinal said.

Both Mychajliw and Deputy Comptroller Gregory Gach replied there will be no such withdrawal. Gach stated that the office fulfilled its obligation based on a county charter that was revised following the fiscal crisis notoriously known as the "red budget/green budget" era of the mid 2000s.

"All we're saying is the Legislature has to be formally advised that a deficit is looming and appears on the horizon," Gach said. "We aren't going to have the same situation that happened with red-green, of people running around saying 'we didn't know.' All we are saying is everybody knows there's going to be a deficit, the exact amount nobody knows."

Legislator Kevin Hardwick is among those who feel Mychajliw's office was too early with its declaration and says it could force the county into making painful cuts even before knowing how much help they'll get from Washington. He laid out a timeline that, if County Executive Poloncarz were to forward a plan by May 11, would still require back-and-forth opinion periods which would result in legislators acting closer to June 1.

"We're not going to know, on June 1, whether there's a deal on federal aid, and if so, what that deal is," Hardwick said. "This kind of forces our hand. The timing of this is too cute by half, because it forces us to make a decision, a $206 million decision. Even if we blow through $100 million available in the fund balance, that still leaves us $100 million.

"You're going to have to lay off a lot of people come June 1, because you won't know about that federal aid yet."

Legislature Minority Leader Joseph Lorigo, who feels the Comptroller acted within the charter, suggests the county consider using some of the $170 million in its 2019 fund balance in the short term. When some argued about using such a large chunk of a fund that was carefully built, the legislator stated that no one is advocating use of the entire balance, that this is not the same scenario as "red-green," and that federal aid dollars could be put back into that pot.

"Let's say the feds do come. Let's say they do come and bail us out. We can then take that money and replenish the fund balance," he said. "There's nothing to say that we can't go into fund balance to prevent layoffs or keep services going, make sure that roadwork gets done, that social services are continued, that the Sheriff's road patrol is out there doing their jobs. There's nothing to say that we can't dip into fund balance, on an as-needed basis, to deal with those things as they come. And then, if the federal government comes out with money to help local municipalities or to help the counties, then we can take it and then replenish."

Lorigo, near the start of the meeting, also suggested County Executive Poloncarz does not have the power to issue the executive order which extended his deadline to present a remedy plan. Poloncarz, when issuing that order earlier this week, stated that New York Executive Law allows him to do so.