Unless a long-standing dispute over borrowing in Erie County, N.Y., is resolved, the county will not resume capital construction projects this spring because it is unable to advance money to pay contractors.
Comptroller Mark Poloncarz said that the county can only advance money for emergency projects.
"The capital plan is on hold," Poloncarz said. "There are infrastructure projects that should have been completed already."
On Wednesday, the Erie County Fiscal Stability Authority, also known as the county's control board, rejected a request from Poloncarz to allow Erie to either sell up to $89 million of bonds or $40 million of bond anticipation notes for its 2007 and 2008 capital program.
The authority then voted to sell the debt itself, which it can't do without approval by the county executive and Legislature. County Executive Chris Collins has long said he will never allow the control board to issue long-term debt because the board will exist as long as it has debt outstanding. Calls to his office were not returned yesterday.
The county, which has advanced approximately $26 million to contractors, has run into cash-flow problems. A now-resolved dispute that arose last month between the Legislature and the county executive's office over property taxes kept bills from being sent out on time, and the state has delayed reimbursing the county for social services costs, the county comptroller's office said.
For two years, county officials and the control board have fought to stalemate in a kind of financial trench warfare where no one can gain the upper hand but the parties are still willing and able to inflict pain on each other. Neither can sell debt without the approval of the other.
ECFSA chairman Robert Glaser said in a letter to Poloncarz that the comptroller was "playing politics" and that he hadn't demonstrated the county could borrow more cheaply. He also wrote that Poloncarz had made an "unauthorized and unwarranted" call to Moody's Investors Service over a rating issued to the control board.
Poloncarz said he contacted Moody's because the control board had misrepresented a borrowing agreement with the county. ECFSA executive director Kenneth Vetter called that charge baseless.
On Dec. 31, Moody's withdrew its MIG-1 short-term rating on the authority because, it said, the control board's sale of Bans had been postponed for an undetermined amount of time and another deal had been canceled.
In a compromise last year, the ECFSA attempted to sell $84.7 million of bond anticipation notes and $75 million of revenue anticipation notes in late September but the deal failed amid market dislocation. The board allowed the county to privately place the Rans, leaving the capital financing for another day.
