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Erie County debt spirals down

Andy Ouriel • Jan 15, 2014 at 10:45 AM

Paying off Erie County’s debt seems more tedious than dealing with student loans or an underwater mortgage payment.

Bit by bit, however, Erie County commissioners continue to partially erase the overwhelming red ink hindering public finances. The county’s debt entering 2014 totaled $93 million, according to financial data the Register obtained through a public records request. It’s the lowest debt total for Erie County since 2004.

Without adding any new payments, commissioners could write their final check on the borrowed money in about 30 years.

“The county commissioners have been charged with reducing the massive debt accumulated over many years,” Erie County commissioner Pat Shenigo said. “Everyday we continue to look at ways to save the taxpayers money as well as not adding additional debt”

Debt typically accumulates through officials borrowing money for major multimillion infrastructure projects.

Banks or financial companies then charge interest on the principle amount to make money off a loan.    Drowning in debt

Anywhere from 80 percent to 85 percent of the county’s total debt derives from water, sewer and landfill operations.

Critics contend negligent financial planning and foolish decisions involving infrastructure projects — water pipes, sewer lines and a landfill expansion, among others — greatly contributed to the county’s debt.

These projects resulted in the debt skyrocketing from $22 million in 1990.

Commissioners also burned through $10 million in savings from 1998 to 2008, draining almost all of the funds kept in a reserve account necessary for emergency situations. A robust savings account also helps officials borrow money at lower interest rates.

Erie County commissioner Tom Ferrell, first elected in November 1988 and serving in office ever since, served on those previous commission boards approving the debt-escalating projects.

Ferrell has argued the projects creating debt have actually provided many valuable assets to county residents, such as potable water in rural areas.

But the other two present commissioners, Shenigo and Bill Monaghan, have harshly criticized past decisions leading to gigantic purchase orders on ill-conceived projects. Monaghan entered office in 2007 and Shenigo in 2009.

Among the head-scratchers occurring during previous terms before Monaghan and Shenigo arrived:

Approving a $21 million, 30-acre expansion at the landfill, providing excess capacity. This created both debt and several year-end landfill deficits for numerous years.

• Building an $18 million water line project to serve rural residents about a decade ago. Only a fraction of residents tapped into the new line, far fewer than expected.

• Spending $500,000 for farm property that was to be used for a would-be technology center in 2007. The land was later found to be ill-suited for construction.

Commence conserving

Since they began working together in 2009, Monaghan and Shenigo put a stop to irresponsible spending practices and rigorously examined budgets in hopes of lowering the debt.

The result?

Erie County’s debt decreased almost 20 percent, from peaking to $116 million in 2008 to $93 million today.

“It’s important we pay down the debt,” Monaghan said. “By paying down the debt, that’s gong to be able to free up some money down the line for us”

The only building projects currently underway are ones they’ve already secured funding for.

Case in point: Erie County officials temporarily bumped up the sales tax rate until October. The county’s take increased from 1 percent to 1.5 percent on all taxable goods. In total, the present sales tax rate in Erie County equals 7.25 percent, with 5.75 percent going to the state.

The percentage hike translates to an extra $7 million generated for Erie County going toward funding various infrastructure projects.

“We want to pay the debt down so we can make improvements or upgrades wherever they need to be made without having to go to the taxpayers again like we just did,” Monaghan said.

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