December 6, 2021

Heading toward the fiscal cliff

What would happen if Cortland County ran out of money?

Todd R. McAdam/Managing Editor

Jay Forbes of the Cortland County Highway Department points to where the frame rails are coming apart on a 2010 10-ton truck. Beyond the truck, a 2008 Pay Star truck with 163,537 miles on it needed rails on the truck bed welded. If they crack again, they can’t be repaired, Forbes said.

The Cortland County Highway Department worker pulled the 10-ton truck out of the bay. One of the wheels was stuck, dragging for perhaps 30 feet.

When workers lifted the bed of the dump truck, rust briefly showered down, joining a pile on the frame. The frame itself was coming apart, and parts of the bed were cracked. It’s a 2010 Work Star truck with 120,874 miles on it, but rigs like that haul 15 tons of salt at a time, and similar loads of fill, asphalt and other material in the summer. They take some abuse.

A few feet away, the workers showed a 2008 Pay Star with 163,537 miles on it. The beams supporting the truck’s bed had been welded. One more crack and it won’t be repairable — or safe.

Todd R. McAdam/Managing Editor

The frame rails of this 2010 Work Star 10-ton truck owned by the Cortland County Highway Department is coming apart. The truck has 120,874 miles on it, but carries 15 tons of salt at a time, increasing rust and adding strain to the frame

Highway Superintendent Charlie Sudbrink wanted to replace both trucks in the 2020 budget, but he had to use state money, not local tax dollars to do it. That state money was also the only money he was going to get for road repairs.

Here was his dilemma: no new trucks, less road repair; get the new trucks, less road repair.

He decided to buy trucks, but could afford just one.

“We need our employees and equipment that is safe,” he said Thursday.

He’s not the only county department head making tough decisions. Sheriff Mark Helms cut $150,000 in jail inmate boarding out costs. The Department of Social Services cut at least $1 million.

For years, the legislature has tapped its bank accounts to defray the property tax levy in its annual budgets — up to $1.7 million proposed for a $142.8 million 2020 budget. The county is supposed to maintain 10% of its budget in reserve.

Tapping the fund for $1.7 million will bring that down to about $9.3 million.

If it keeps doing that, it will be out of money in five years, county leaders said, maybe three.

Legislators say tough decisions will continue as the county tries to stop a ball rolling toward the cliff of insolvency.

How did we get here?

A multitude of things over the years have led to this point, legislators said. Many were pointed out in a draft audit done by the state Comptroller’s Office that the county released Wednesday.

Legislators failed to properly oversee county finances before 2017, the original period to be examined, the audit report states. Auditors had to go back to 2012 records, and still found problems dating back as far as 2004.

The county lacked so much essential financial information, key financial officials and policies and procedures it should not have been making financial decisions, the Comptroller’s Office said.

Legislature Chairman Kevin Whitney (R-Cortlandville) said it all added up to the “perfect storm” during a particularly stressful budget year.

Legislator Sandra Price (D-Harford, Virgil) said a large factor in the county’s financial situation is the state’s unfunded mandates.

“They’ve (the state) added mandates that we’ve had no choice on,” she said, such as the district attorney’s $200,400 salary, which the state stopped subsidizing in 2016.

It also didn’t help that the county didn’t have the proper finance department people in place.

“We were making decisions without the financial knowledge and that was very risky and proved not to be the best thing,” she said.

Legislator George Wagner (R-Marathon, Lapeer) said this year in particular has been tough because the county needs to use $1.7 million to cover a Department of Social Services shortfall and then another $1.9 million to repair the jail.

“If those things had not happened, we would have been golden,” he said.

However, Whitney said the legislature should have seen this coming.

“We haven’t made any systematic changes,” he said. “There’s a lot of the same stuff from 2004 that exists in this audit that we never did.”

He also said legislators didn’t listen even when the county did have appropriate finance officials, leaving the county’s finances in disarray.

But he agreed the mandates don’t help.

“The governor is going to bankrupt this county if we can’t figure something out,” Whitney said in September when he presented the draft 2020 budget, when the possibility of insolvency first came up.

Before the money runs out

The state Comptroller’s Office has not released the official audit and Communications Director Jennifer Freeman said the Comptroller’s Office cannot discuss anything related to the county until that audit is officially complete.

However, Cortland County isn’t the first to face the possibility of going insolvent. Nassau County, Erie County, Buffalo and Troy all have had a state-appointed financial advisory board in place to help officials make decisions.

The process actually begins before insolvency with an advisory panel, which gains more control if problems get worse. It’s a loss of local control.

Nassau County had an Interim Finance Authority put in place in June 2000 under Nassau Interim Finance Authority Act, a state statute.

The seven-member, non-partisan board has “powers under the act to monitor and oversee the county’s finances,” according to the authority’s website.

It can issue low-cost bonds and notes to the county. It can help a county re-structure its debt to save money.

If a municipality’s financial situation worsens — which happened in Nassau County in 2011 — the board could implement a control period, increasing the board’s authority.

“NIFA has approval authority over certain things including contracts, imposing a wage freeze and approving or disapproving debt issuance,” said Eric Eichenlaub, a local government lawyer with the state Comptroller’s Office. “Certain things just can’t happen without NIFA’s approval at this point.”

To create such a board, the county’s state delegation must introduce bills, to eventually become laws. Assembly members Barbara Lifton (D-Ithaca) and Gary Finch (R-Springport) both said they’re aware of the county’s financial problems, but nobody has asked them to act. State Sen. James Seward (R- Milford) did not return calls to comment.

What this means to you

The Nassau financial board’s decisions on spending and borrowing could directly affect government services, said Christopher Wright, a board member since 2007.

“The budget would rest with the legislature, but it’s subject to oversight on spending on certain levels,” he said.

Essentially the board could advise the legislature on ways to cut spending. That could include cutting services: water systems, road projects, non-mandatory programs — even if they benefit taxpayers.

The board can decide how much the county can borrow, and that might affect a project.
Wright noted the board at every spending request has “suggested a more realistic view of spending” and when it’s received a bond request, it approved a much smaller bond.

The board wouldn’t be able to change the property tax levy or property tax rate, though. The legislature keeps that control.

“The statute clearly gives us spending and borrowing control, but not taxing authority,” Wright said.

A county — such as Cortland County — should avoid getting itself in such a pickle it needs the state to step in, Wright said.

“It would take away the budgetary self-determination of the legislature,” Wright said. “It doesn’t help the taxpayers get from their elected official what they should expect. This (the board) should be a last resort.”

How to prevent insolvency

  • Wagner —Wagner suggests cutting services and spending 7%, although he did not specify which services to cut.
    “It’s everyone’s job on this legislature, every department, every employee to aim for that goal,” he said.
    Most of all, he said, everyone needs to keep a positive outlook.
    “That includes legislators, department heads and employees and eventually that will filter down to the taxpayers,” he said.

 

  • Price — She also said people need to remain positive.
    “We’ve got a wonderful community,” she said. “And we’ll care about them (the taxpayers) in the best fiscally responsible way that we can and that’s with being very careful with our spending.”
    She said the county must look at cutting what the state doesn’t require — which could include the highway department and Cortland County Sheriff’s Department patrol division.
    “Those are mandated by the taxpayer,” Price said. “For some taxpayers that’s all they get — security in their homes and the road to get to work to pay for their taxes.”
    She also said the county should consider consolidating departments, such as mental health with the health departments, and buildings and grounds with the highway department.

 

  • Whitney — Replace the treasurer’s position with an appointed comptroller. That would need to be done by referendum, which voters considered and rejected in 2004. Another effort in 2013 never got as far as the referendum.
    Whitney said “it’s ludicrous” that the only requirements to become an elected treasurer are to be at least 18 years old and a county resident.
    Whitney also said the county must be able to keep the director of finance, assistant director and auditor in the nance department.
    “The key is support those three people and all of our department heads because they really do point out the problems in the county,” he said.
    And give them a chance to work, he said. “People have got to be patient and give them time,” he said.