Friday, July 08, 2005

A Cash Starved County

If you're the type of person that frequents this blog, I can only assume that you are the type of person that is also keenly aware of the financial distress that is common amongst the municipalities of Western New York. Erie County is a few short weeks away from denigrating into something akin to The Road Warrior sans Australian accents. Other counties are having an equally difficult time and there doesn't look to be much relief on the horizon. What can be done to bridge all these budget gaps?

Did you say spend tobacco settlement money? Sorry. Apparently that ship has sailed for good.

Monroe County has spent all of its $142.6 million. More than half of this money was used to pay off some existing debt, but a chunk also helped finance the expansion of the Monroe County Jail and another chunk was used to fill a budget gap.

There are those that believe the settlement money should have gone into increased promotion of smoking cessation and prevention programs. There is some logic to this. By reducing the number of people that smoke, you reduce future costs to Medicaid by those smokers. See? It all adds up.

But it doesn't really. See, I'm of the school of thought that believes there aren't any smokers out there that are somehow missing the fact that cigarettes will kill you. Education and promotion will do little, in my opinion. I firmly believe that ending smoking in bars was the single most effective step in inducing people to stop smoking. Hell, it's how I was able to stop smoking. By decoupling the relation between bars and cigs, I was able to finally break the habit.

So, then, what do you spend the settlement cash on? Well, you invest it. Not in the stock market or some other thing. No, a community should invest it in itself. Sometimes these projects are straight forward, the local government builds or creates some resource that, in turn supplies the region with ongoing returns on that investment. It bays for itself as well as increases the overall wealth of the area. Unfortunately, projects like that do not always just drop in on you and announce themselves. Additionally, they are not always without some amount of risk on their return. Some current projects that fall into this category are the Paetec Soccer Stadium and Fast Ferry. See what I mean? Not so sure if those projects will payoff, do you? So yeah. That's the high-rolling game of public sector capital investing.

Building a jail? I'd say there isn't too much return on that investment. Sure, we needed it. That's fine. It should have been paid for out of the budget. Let me put it this way. You're running the county and you've got your budget projected out for a couple of years. You've got some infrastructure projects that need to be taken care of and things are kind of tight because your spending is almost entirely on consumption. Suddenly, a big sack of money lands in your lap. You could say to yourself, this is an opportunity to engage in some projects that will help open up more revenue streams. Or you could say to yourself, we can build a jail. See what I mean? It's all so damned shortsighted.

I'm not alone in this:
...other projects that officials initially designated for tobacco money funding — a juvenile justice center, a soccer complex and a major expansion of the Seneca Park Zoo — were shelved in the face of the county's financial difficulties.
Taxes. Taxes should be considered. We're already overtaxed and it is very hard to disagree that raising taxes to build a new wing on the jail would have been bad. It became about focusing on the here and new. I agree with this next part from the article.
But Legislator H. Todd Bullard, D-Rochester, disagrees. He faults the county for focusing too much on the immediate and not enough on the county's long-term needs.

"We used the money for quick fixes and we didn't come up with a long-term strategy that had a community buy-in from many sectors," Bullard said.
It's just mismanagement. The county didn't ask the question, "How can we use this money to bring business to Rochester? How can we deploy this so jobs are created?" They had an opportunity and they blew it. I'm glad the County Executive who was running that train wreck has moved on. But sometimes I wonder whether he's been replaced with anyone with a better vision of what the region can become.


Julia said...

Without making a judgement, I will say that our county (Chautauqua) used some of its tobacco money to get rid of its debt. I'm aware that this action, along with other financial moves, helped increase our bond rating to a much better level. Not that you want your officials borrowing money left and right, but sometimes you find you have to. Just saying what another county did. I forget where the rest of the tobacco money went, but I seem to remember that we got it in one bulk payment instead of yearly/quarterly installments.

Zubalove said...

The bulk payment is smart. It's better to have it and be able to move it around, instead of having this revenue stream that could potentially dry up given future market forces.
Paying down debt is fine too. However, my gripe is that now the money is gone and we don't have a lot to show for it.
Maybe I needed to address that a little more clearly.