Local services lose on rate cut

PERKINS TWP.The Federal Reserve's attempts to pump life into the economy by lowering interest rates is draining cas
Tom Jackson
May 24, 2010

PERKINS TWP.The Federal Reserve's attempts to pump life into the economy by lowering interest rates is draining cash from the treasuries of Erie County and Ohio.

Governments are only allowed to invest taxpayer funds in safe cash investments, such as government securities and bankcertificates of deposit.

When the Federal Reserve cuts interest rates, the interest rates fall for CDs and other cashinvestments.

Jo Dee Fantozz, Erie County's treasurer, says she can't predict exactly how the Federal Reserve's actions will affect the county, but says it will likely cost "tens ofthousands" of dollars.

Investment income has been a bright spot for Erie County'sgovernment.

Sales taxes, the most important source of revenue for Erie County, have grown only about 2 percent a year.