Mychajliw on Friday released information indicating he's concerned that Erie County doesn't have the cash on hand to make a payment, which was scheduled for next week.
Mychajliw says the New York State Health Department (NYDOH) had requested about half of a $29 million payment concerning ECMC that was delayed from last year until now. But Mychajliw says the county doesn't have the $15 million in cash to make the payment.
Erie County ended 2012 with just $9 million, when Mychajliw says his office had estimated cash availability of $41 million to end the year.
"Our estimates show Erie County should have finished the year with $41 million in cash and it ended with $9 million in cash. That's a big discrepancy," he says, adding that it's serious but manageable.
Mychajliw says the county borrowed $35 million in 2012 to make sure it was covered to make the entire $29 million dollar payment. But ,with only $9 million in cash to end the year, his office is wondering how the $35 million was spent.
After notifying Erie County Executive Mark Poloncarz, the budget director, and the Erie County Control Board, Mychajliw requested the NYDOH permit a delay for the payment until March 12th, and the state agreed to the delayed payment late Friday afternoon.
The following is an email Mychajliw released Friday morning outlining his concern.
There is a cash crunch facing Erie County that we discovered, literally, on “Day One.” The County is a $1.3 billion operation that doesn’t have enough cash in hand to make a $15 million payment next week.
Erie County should have ended 2012 with $41 million cash in hand. Instead, the County ended 2012 with $9.6 million cash in hand.
Our team went to work on our first day, dug deep into the budget, recognized this very serious cash flow issue, responsibly sounded the alarm to the administration and Legislature, and worked collaboratively to delay this payment that is due next week, January 8th.
We found out on “Day One” that money was so tight at the end of the year, there was a chance Erie County could have ended 2012 with a cash deficit and would not have been able to pay vendors.
The major issue here is simple.
Last year Erie County borrowed an additional $35 million through a Revenue Anticipation Note (RAN) to more than cover a previously scheduled Intergovernmental Transfer (IGT) payment due in 2012 of $29 million concerning ECMC.
The administration reached an agreement with ECMC to delay this $29 million payment to this year, 2013.
Simply put, it meant the County still had the $35 million in 2012, but didn’t have to use these funds until the bill came due in 2013.
Factoring in the $35 million the County borrowed in 2012 but never had to use to make the delayed payment, there should have been $41 million “cash in hand” at the end of 2012.
But the Comptroller’s Office reported that Erie County only had $9.6 million “cash in hand” at the end of 2012.
The question posed to the administration and the Legislature: what happened to the money?
On my very first day in office, January 2nd, New York State contacted our office and said they needed $15 million of the $29 million as a payment due next week, on January 8th.
Keep in mind, there should have been $41 million cash in hand to cover this. There isn’t. Erie County cannot make the payment.
In layman’s terms, think of a family buying a $29 million car in 2012, taking out a $35 million loan in 2012 to cover the payment, but then you work out a deal to keep the car but make no payments until 2013. That’s fine and dandy, as long as you don’t spend the money during the remainder of the year and have enough to cover the payment in 2013.
The bill came due as agreed upon in 2013, and now the County doesn’t have the money to pay it, because the majority of the money was spent in 2012.
We responsibly sounded the alarm on this issue and we are working closely with ECMC to delay the payment.