Letters to the Editor
Here are some more facts:
By Dan T Warren
Mar 1, 2005, 19:31

Here are some more facts:

Just after Election Day 2003 the County Executive revived a salary review commission that said the county executive, comptroller, sheriff and clerk deserve pay boosts of at least 35 percent. County legislators were also in line for a nearly 25 percent raise.

This salary review committee consisted of nine members that were picked by the County Executive and county lawmakers.

After reports of improprieties in the Erie County Highway Department became public a Special Grand Jury was empanelled by Administrative Order AO/323/03 issued by the Hon. Eugene F. Piggott, Jr., Presiding Justice of the Appellate Division Fourth Department and Deputy Administrative Judge Joseph J. Traficante, Jr.

The purpose of this Special Grand Jury was to investigate “both criminal and non-criminal matters relating to the practices and behaviors of the Erie County Highway Department.”

This Special Grand Jury issued a report and recommendations pursuant to CPL § 190.85(1)(c) on or about October 13, 2003.

Upon information and belief the conduct outlined in the report of the Special Grand Jury continues in other departments to this day.

By letter dated March 11, 2004 the County Comptroller advised the County Executive and County Legislature that the 2003 books have been closed and the year ended in a $40 million deficit. This letter further warned “I urge you to seriously and aggressively consider actions necessary to minimize the structural budget deficit which sets the stage for these annual deficits. Our once-healthy fund balance has been substantially depleted and is progressively placing more pressure on our liquidity, our financial position, and our creditworthiness in the marketplace as measured by our rating agencies, Moody’s and Fitch.”

Also in this letter from the County Comptroller she alerted the County Executive, once again, the need for “the timely issuance of Budget Monitoring Reports, including forecasts of year-end fund balances beginning at mid-year. Neither of these recommendations has been implemented.”

The County Executive has a program of favoritism in the contracting, hiring and disciplining of people closely related to himself or his staff on the 16th floor of the Rath Building which has been dubbed as the “friends and family program”

The County Executive and those acting on his behalf and in privity with him or individuals who have acted with his knowledge and consent have purchased furniture from Buffalo Office Interiors, Inc. in violation of law and resulted in the County of Erie being overcharged by approximately $500,000.00.

James Spano the owner of Buffalo Office Interiors, Inc. is upon information and belief is a close friend of and/or a major contributor to the County Executive’s political campaigns.

The County Attorney, who is appointed by the County Executive, reviewed this transaction and concluded that it was legal.

The County Comptroller, who is elected by the voters of Erie County, reviewed this transaction and concluded that the lawful purchasing procedures were not followed and resulted in an overpayment of approximately $500,000.00.

Based in part on the report of the Erie County Comptroller’s report on this transaction and its own investigation the New York State Attorney General commenced a civil action in the Supreme Court, Erie County under Index #I2004-4770 entitled State of New York v. Buffalo Office Interiors, Inc. on May 13, 2004 to recoup this overpayment on behalf of the County of Erie.

Upon information and belief subsequent to the release of the reports of the Office of Attorney General and the County Comptroller the County Executive hired the law firm of Phillips, Lytle, Hitchcock, Blaine and Huber to conduct an independent investigation into this transaction without adhering to the process for retaining professional service in violation of the Erie County Administrative Code § 19.08.

Upon information and belief this independent investigation was terminated after 12 days of the law firm investigating this transaction because it was in essence a duplication of the work then being performed by the Office of Attorney General.

Upon information and belief the law firm charged the County of Erie $11,375.00 for its service in connection with this transaction.

Upon information and belief the law firm of Phillips Lytle had donated $13,000 to Giambra's election campaign in 2002 and 2003.

By letter dated June 17, 2004 the County Comptroller once again warned of the impending fiscal crisis and stated “In summary, I have repeatedly warned against balancing budgets by using Fund Balance and other one-time revenues and I have repeatedly called for more timely Budget Monitoring Reports with year-end projections. Unfortunately, my warnings and recommendations have not been followed. Had my repeated warnings against deficit budgets and recommendations for timely BMR’s been followed, the County would not be in the apparently distressed state of fiscal affairs now reflected by 2004 and 2005 cash flow data.” The County Comptroller went on to state in this letter “The Administration and the County Legislature have an obligation to take immediate actions designed to minimize the expected deficit for 2004 and to lower the anticipated increase in combined sales tax and real property taxes of $125 million in 2005.”

In July 2004 Fitch Ratings downgraded the rating on $471.4 million in outstanding bonds from 'AA-' to 'A+', assigned an underlying 'A+' rating to the County's then upcoming estimated $87 million general obligation bond issue, and placed a negative outlook on these ratings.

In July 2004 Moody's Investors Service downgraded the rating on the County's outstanding bonds from A2 to A3, assigned an A3 rating to the County's then upcoming sale of an estimated $85 million in Public Improvement Serial Bonds, and placed a negative outlook on these ratings.

This downgrading of the County’s bond rating in July 2004 was due, at least in part, by the inclusion in the 2004 budget of speculative decrease in personnel costs as a result of a yet enacted early retirement incentive program despite a warning to this effect from the County Comptroller by letter dated November 10, 2003 (this letter is available at http://www.erie.gov/depts/government/comptroller/pdfs/2004budet-ltr.pdf )

Upon information and belief the County Comptroller by letter dated November 18, 2004 alerted the County Executive and the Legislature that despite the draconian cuts, the Red Budget was still likely to produce a significant deficit for 2005; warned against using $28 million in reserves; suggested that Sales Tax revenues could be significantly over-estimated; reminded them that the use of Tobacco Securitization revenues of nearly $13 million was disguising the size of the true structural budget deficit; presented a schedule that projected fringe benefits could exceed budget by $18 million; suggested that the Turnover account estimate of over $9 million was very optimistic; noted that providing a subsidy to ECMCC of only $4 million would put severe pressure on the new corporation; and that the red budget does not balance and it does not solve the County's structural budget deficiency.

In November 2004 the New York State Office of the State Comptroller issued a report based on its audit of the Erie County Medical Center Corporation (the complete report is available at: http://www.osc.state.ny.us/localgov/muni/audits/2004/counties/eriemc.pdf ). This audit found, inter alia, that:

• In January 2004, a public hospital that was losing significant amounts of money as a part of County government was converted into an independent entity, Erie County Medical Center Corporation (ECMCC), with no new revenue or operational plan to make it self-sufficient.

• Instead, the deal imposed additional debt costs on the hospital, though the borrowed money was not used to improve the hospital’s operations. The hospital now has $101 million in long-term debt, up from $22 million when it was part of County government.

• Paying off that $101 million in debt will cost $214 million in principal and interest over 30 years.

• Erie County could have transferred the hospital’s assets for free, but instead used the deal to borrow funds to pay for its own operations at a time when it was running out of cash. Using long-term debt to pay for this year’s operating costs violates the most basic principle of responsible government finance.

• Because the Medical Center issued the debt, County government created the false impression that its debt is lower, even though the County is obligated to repay the debt.

• Erie County is still obligated to subsidize ECMCC regardless of its performance. The County must cover the Medical Center’s losses and pay the debt service. The County has also promised to provide capital funds. In 2004, for example, the County operating subsidy is $24 million. According to the one-year plan, the County subsidy will increase slightly in 2005.

Upon information and belief Anthony J. Colucci, III is the Erie County Medical Center Corporation’s counsel.

In December 2004 the Erie County Comptroller released an Audit Of County Purchase Procurement Process for the period January 1, 2001 to December 31, 2003, which revealed that $679,000.00 in purchases of computer network upgrades by the Department of Information and Support Services (DISS) were made without a valid purchase order and without available budget appropriations to pay for the goods.

That upon information and belief the County of Erie is purchasing and/or installing new computer equipment and replacing older equipment that is still functional and under either a warranty or service contract.

An Erie County Comptroller’s audit noted that since 2002, Erie County used expired bid contracts from 2001 to purchase snowplow trucks for nearly $1.6 million and paid approximately $955,000 to purchase add-on equipment (snow plows, dump bodies and sander/salters) for the trucks. "Rather than requiring new bids, the Division of Purchase allowed Erie County Highway Division managers to treat one-time, single use bids as multi-year contracts," Naples said. "County Policies were further circumvented when specifications on subsequent purchases were altered to the point that they no longer agreed with the original bid specifications."

Upon information and belief the County has acquired snow removal equipment that only requires one person to operate.

Upon information and belief the County is manning this equipment with two employees.

Upon information and belief, in August 2004 the Erie County District Attorney was denied permission to make the Special Grand Jury Report available to the public on the official website of Erie County (http://www.erie.gov) by someone in the County Executive’s office which prompted the District Attorney to start a website of his own so the report can be published to the public (see http://www.frankclark-ecda.org/specialgrandjury.pdf).

Defendants purportedly adopted a budget on or about the 8th day of December, 2004 for the County of Erie.

This budget contained revenue estimates that were speculative in that it depended on a sales tax increase which was not, and still has not yet, been lawfully enacted and imposed.

Despite the fact that this speculative revenue failed to materialize before the effective date of the adopted budget the County Executive did not set appropriate spending quotas to mitigate any potential overspending as required by the County Charter and Administrative Code.

The County of Erie has missed its February 1, 2005 pension payment to the New York State Retirement System.

Upon information and belief the county is being assessed an 8% late fee on this missed pension payment.

Upon information and belief the County Executive declared the budget out of balance.

Upon information and belief the adopted budget as amended by the legislature through the date of this complaint is still not balanced and that there in fact will be a significant deficit in 2005.

Upon information and belief the Director of the Erie County Division of Budget, Management & Finance submitted an affidavit in another proceeding representing that the adopted budget as amended is balanced or giving the impression that it is in fact balanced.

The County Executive and those acting on his behalf and in privity with him or individuals who have acted with his knowledge and consent have undertaken a campaign of fear, intimidation and misinformation to sway public support for a sales tax increase and to cover up the severity of the structural deficit of the county as a result of this self-dealing and willful misfeasance. This campaign of fear, intimidation, and misinformation consists of threatening to shut down vital emergency services including Sheriff’s Patrols, 911 communication services, training of volunteer firefighters, curtailing the ability of the Erie County District Attorney from performing his statutory duties under County Law § 700 in prosecuting the criminal element within the county and other public health and emergency services.

The County Executive and those acting on his behalf and in privity with him or individuals who have acted with his knowledge and consent illegally sent layoff notices to approximately 1,500 employees.

The proposed layoffs were formulated by the County Executive and his staff without consultation of the various department heads.

Despite the fact that the County of Erie employs approximately 9,000 people the illegal layoff notices targeted those in law enforcement, emergency services and public health.

The Deputy County Executive sent an e-mail prohibiting all non-elected department heads from participating in the County Legislature’s review of the layoff’s proposed by the County Executive’s staff.

At the direction of the County Executive and those acting on his behalf and in privity with him or individuals who have acted with his knowledge and consent directed that the county parks be closed.

At the direction of the County Executive and those acting on his behalf and in privity with him or individuals who have acted with his knowledge and consent have threatened to prosecute citizens who are present in the public parks in violation of the notices to keep out.

Although the county parks have been closed the employees that would perform functions necessary to keep the county parks open continued to be paid their wages.

On or about February 10, 2005 the County of Erie’s bond rating was downgraded by Fitch from A+ to A-.

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