GOVERNOR, SENATE, ASSEMBLY ANNOUNCE AGREEMENT TO CREATE ERIE COUNTY FISCAL STABILITY AUTHORITY


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Would Provide Oversight and Give County Opportunity to Improve Fiscal Condition

Governor George E. Pataki, Senate Majority Leader Joseph L. Bruno and Assembly Speaker Sheldon Silver today announced agreement on legislation that will create the Erie County Fiscal Stability Authority (ECFSA). The new panel will provide Erie County with immediate financial oversight while giving local leaders the ability to improve the County's fiscal condition without further State intervention.

"The creation of the Erie County Fiscal Stability Authority recognizes the need for the State to provide oversight of the County's finances, but most importantly it provides local leaders the opportunity and incentives to address the County's fiscal challenges on their own," Governor Pataki said.

"We've reached bipartisan agreement at the State level on a plan that offers the County a road map to fiscal stability and now it's time for everyone at the County level to work together to achieve that goal."

"We're hopeful that County leaders and lawmakers will seize this opportunity to take the fiscally-responsible actions necessary to get Erie's finances in balance. But we've also made clear that we are prepared to protect Erie County taxpayers by implementing strict State oversight of the County's finances if this opportunity is squandered," the Governor added.

Senate Majority Leader Joseph L. Bruno said, "This Fiscal Stability Authority is a common sense solution to provide stability and protection for the already overburdened taxpayers and address the fiscal problems of Erie County. Local officials have a great deal of work to do to climb out of a deep financial hole and restore the confidence of hardworking taxpayers. I'm confident this Board will be able to provide the guidance necessary to attain this goal."

Assembly Speaker Sheldon Silver said, "By establishing this authority, I'm confident that Erie County will be able to get its financial house in order and restore stability to its fiscal operations. I believe that this level of rigorous oversight is the best way to ensure that the hard working people of Erie County receive nothing less than a financially sound government capable of fulfilling all its obligations and responsibilities."

Senator Dale Volker said, "The time is now for the Erie County Legislature and the County Executive to work in a cooperative manner to remedy the financial dilemma facing Erie County taxpayers and the essential services they depend upon. The creation of the Erie County Fiscal Stability Authority will provide the needed tools, incentives and financial resources in order for them to make the difficult decisions that they will be currently facing. I firmly believe that this legislation is a fair approach in bringing financial stability to Erie County, and will ensure that future county budgets are fiscally conservative, structurally balanced and in the best interest of the taxpayers of Erie County."

Senator Mary Lou Rath said, "The creation of a control board will give the people of Erie County confidence that their government will be able to recover from the $118 million deficit. Relief from this fiscal crisis is urgent."

Assembly Majority Leader Paul Tokasz said, "This Fiscal Stability Authority is necessary to ensure that Erie County pays attention to Erie County and not other troubled counties. We cannot afford to allow our county government to lose its focus and mismanage itself into another financial disaster. This is about regaining financial integrity and delivering to the county's taxpayers the services and protections they are entitled to."

Under the agreed upon legislation, the Erie County Fiscal Stability Authority would begin its work in an advisory role, similar to the Nassau County Interim Finance Authority (NIFA). The Board would be responsible for reviewing and approving a financial plan submitted by the County.

Under terms of the agreement announced today, Erie County would be required to meet the goals outlined in its financial plan. If it does not meet those objectives, the Control Board would have the authority to freeze wages, approve all contracts, and put in place other fiscal control powers. The Control period would be imposed if the County fails to adopt an on-time, balanced budget; fails to pay debt service; incurs an operating deficit of more than one percent; loses access to market for borrowing; or violates provisions of the Fiscal Stability Act.

Creation of the Authority also makes available new State efficiency incentive funding for Erie County, providing $50 million in grants over five years. The City of Buffalo would also be eligible for this critically-important incentive aid.

Under specifics of the plan outlined by the Governor and Legislature, Erie County would be required to adhere to the following financial conditions:

Receive approval of a four-year financial plan outlining a return to fiscal stability by October 1, 2005 in order for ECFSA to assist the county with up to $120 million in 2005 deficit financing backed by the county sales tax; and
Close increasing portions of future year projected gaps: 35 percent in 2006, growing to 80 percent in 2009. ECFSA finances the remaining budget gaps through locally backed revenues.
The Board would be comprised of seven members, four directly appointed by the Governor and the remaining three appointed by the Senate Majority Leader, the Speaker of the Assembly and the State Comptroller. Four members of the Board must be residents of Erie County. ###