Spend another $ 25 million now, save $ 42 million later.
This is how some lawmakers in the county view the advance payment that the county should make for its $ 250 million contribution to the new Buffalo Bills Stadium.
New York and Erie County provided some clarity on how much the public will spend on a new $ 1.4 billion Buffalo Bills Stadium. But government officials left some specific questions unanswered.
Erie County has a record-breaking $ 174.5 million surplus from last year, thanks to the influx of federal stimulus support. At the same time, the county is on the verge of paying out $ 250 million in new stadium costs.
County Administrative Board Mark Poloncarz requests that $ 75 million of the county’s surplus money be spent as a cash down payment on the new arena. The remaining $ 175 million would be borrowed.
That would represent the largest one-time borrowing the county has ever made, according to the Erie County Comptroller’s Office.
The Erie County Legislature will finally begin discussions on Buffalo Bill’s stadium deal this week, but that does not mean a final vote will be forthcoming.
Some county legislators want the county to spend more of its budget surplus – $ 100 million – on the stadium so that the county incurs lower borrowing costs in the future.
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Based on a preliminary analysis released by the Comptroller’s Office this week, a reduction of the additional $ 25 million in surplus cash could save the county at least $ 42 million under a 30-year loan for the new Bills facility.
“We have all this surplus money,” said lawmaker Joseph Lorigo, head of the Republican-backed minority assembly. “We should spend more of that money on one-time use. This is the perfect example of paying for a one-time cost with one-time revenue.”
Approval of any county bonds for the arena requires a super-majority vote of eight out of 11 legislative votes, so the fact that some lawmakers want to see more surplus money spent on lowering the stadium’s long-term borrowing costs cannot be ruled out.
The inspector Kevin Hardwick did not take a position on Wednesday on whether more surplus money should be distributed against the county’s costs for stadium construction, and said that the decision should be made by the county’s legislature and the county administrative board. But there is no short-term financial damage for the county, he said, if more surplus funds are allocated to the stadium business.
Proponents of her case have been working to make the actual transcript of this statement available online.
“It’s worth investigating,” he said.
A spokesman for the county said Poloncarz was not available to comment on the matter on Wednesday.
But both the control authority and the county administration agree that in any case, the new borrowing for the stadium will not have any negative impact on the county residents’ property tax.
The county already borrows $ 6.8 million a year to maintain the current Bills Stadium, according to the Comptroller’s Office. Deputy County Chief Timothy Callan said replacing that amount with $ 8 million to $ 10 million a year in borrowing costs for a new stadium is not a big difference when taken within the $ 1.6 billion total budget.
Based on a Buffalo News review of the county’s budgets, Erie County’s debt burden has been steadily declining since 2013, and the county paid down more than $ 180 million in IOUs during that period.
The Buffalo Bills never considered leaving western New York and did not seriously consider a new stadium anywhere other than Orchard Park, a Pegula Sports and Entertainment chief told Erie County’s lawmakers on Thursday.
But county lawmakers need to consider other calculations before deciding whether to support using more surplus funds for a stadium.
• How much surplus money do legislators want to spend this year on non-stadium projects?
The county already has plans to spend some of its surplus money. Much of it would go to one-time costs, such as construction-related projects, renovations and improvements in the county. In addition, many county legislators want to redirect hundreds of thousands in surplus money to spending in their own districts.
• How do lawmakers weigh the potential savings of tens of millions of dollars in county loans for a new arena against the desire to set aside more money in reserves in uncertain fiscal times?
This second issue is more complex.
“It will focus on resilience issues,” Erie County Executive Mark Poloncarz told The Buffalo News about his address in the county. – The county itself can not solve the issues that politicize and create division, but hopefully we can do things to bring society together.
The Erie County Statute requires the county to retain at least 5% of its general fund budget in unlimited reserves to protect against unexpected costs. With that standard, the county already exceeds the minimum requirement by 7.6%, said Callan, who previously worked for the county’s budget office.
Taking into account the likelihood of future interest rate hikes, as signaled by the Federal Reserve, the Comptroller’s Office acknowledges that more money spent now could save millions in stadium loan costs in the future.
“Like a mortgage on your house or a car loan, the cost goes up,” Hardwick said. “And the less you borrow, the more money you save on interest rates.”
He also said he recognizes calls raised by Callan regarding lingering fiscal uncertainty and volatility that could send the economy back to a recession, which requires the county to lower itself to its reserve funds.
“Ultimately, it’s a political decision,” he said.
According to Poloncarz’s plan to sweep up $ 45 million of surplus money into the county’s reserves, Callan said the county’s rainy day fund would rise to 10% of the general fund. This would amount to the largest one-off increase in the county’s reserves in its history. The county has generally added about $ 1 million to $ 2 million a year to its reserves.
Since the Great Depression, the Association of Government Finance Officials has recommended local authorities become more conservative in keeping money available to cover economic downturns. The association recommends that governments keep enough money in the general fund to cover two months’ operating costs. This would correspond to more than 16% of the county’s operating budget.
Lorigo said it is possible for the county to save money and still remove more money for a rainy day.
“Wherever we can save on expenses is something we should look at,” he said.
The Erie County Legislature will meet again on Thursday to discuss the terms and costs of the stadium deal.