What will Collins and County Legislature do with $74.1 million in cash?

Before the end of 2011, Erie County will receive a $74.2 million windfall of unrestricted, unanticipated revenue from President Barack Obama’s Recovery and Reinvestment Act.

The money is real, and it is coming. This $74.2 million—which represents Medicaid relief—is also in addition to the rest of the money in Obama’s “stimulus” bill.

In fact, every county government in New York State will get some money from the same source. A total of about $117 million is coming to the eight counties of Western New York:

Erie $74.22 million

Niagara $16.39 million

Chautauqua $11.16 million

Cattaraugus $5.91 million

Wyoming $2.05 million

Genesee $3.36 million

Orleans $3.05 million

Alleghany $3.45 million

According to knowledgeable veterans, here’s how the money will come to the counties: First, there will probably a lump-sum payment of about $14.6 million for the period from October 1, 2008 through March 31, 2009.

Then, starting the first week of April, Erie County will get about $580,000 a week for the next 108 weeks. Here’s how that will work: New York State, which on Tuesdays takes money from every county government in order to pay for Medicaid, will take that much less from each county account.

And because Erie County has already budgeted for its Medicaid payments, this new-found extra money will have to be re-allocated by county elected officials.

That means that our county executive and the County Legislature will have to decide what to do with the money. They can’t just put it into reserves. And they can’t use the money to pay off debt. (Erie County’s debt is far, far below the debt carried by other New York counties, and is less than 15% of its debt limit anyway.)

So here is the test for our elected officials and for our community: What should we do with the money?

Federal action, local paralysis

County Executive Chris Collins and Buffalo Mayor Byron Brown may be about to thwart the policy proposed by the president, enacted by Congress and endorsed by most economists. And despite the economic downturn, we are still hearing the language of cutbacks when Nobel Prize-winning economists say that now is absolutely not the time to be cutting back.

It’s the express policy of the federal government to aid local governments so that they don’t have to lay off more people. America may have reached 10 percent unemployment already; the Obama Administration does not want more unemployment. So if the purpose of this federal spending is to prevent layoffs and, further, to generate jobs to replace those that have already been shed in this recession, how should we—here in Erie County, with our extra $74.2 million—do it?

We know what the think tanks and interest groups have advised: The Brookings Institution, the New America Foundation, the American Society of Civil Engineers and many others have published many studies demonstrating the need for infrastructure investment. That’s why you’ve seen so many news items about “shovel-ready” projects.

Some (thankfully, not all) of the “stimulus” money isn’t going to get used here locally unless the elected officials of Erie County government agree with the appointed politicians of the Erie County Fiscal Stability Authority, so that Erie County can go forth with its capital program. Things aren’t much better in Buffalo government. In the city, the Buffalo Common Council is going to have to come to terms with Mayor Brown or else the city’s capital program stalls.

But that still leaves Erie County’s extra $74.2 million.

Ideas, please, and hurry!

A very senior Buffalo philanthropist believes that this $74.2 million county windfall must be immediately put into an account that is completely and solely dedicated to sustaining the Olmsted Parks. His theory is that soon, interest rates will climb back up to a reasonable level (currently depressed, he suggests five percent as a historic norm), and that a trust or dedicated fund of more than $70 million would yield $3.5 million a year for as long as the trust stayed in place—enough to sustain the regional asset known as the Olmsted-designed urban parks system.

Not a bad plan, say I. The problem: The job-creating impact of setting up an untouchable trust would be minimal in the short term. But this is a good thought, so our elected officials should chew on it. Putting half the money into a trust (say, $35 million) would yield enough money to cover the $1 million gap that the county says the city needs to pick up to maintain the parks. As about 29 percent of Erie County resident live in the city, it’s hardly a bad idea to use these funds to sustain the livability of the city—especially because Olmsted is much, much more than just a local park.

As for the rest of the money, some observers nudge me that it needs to be spent now. Regional unemployment is going to be even worse, they say, if there isn’t some extra construction right away.

There is plenty of work to be done in the next two years while the windfall comes in, Tuesday after Tuesday.

And even the least aesthetically oriented observers point out that now is the time to bolster our arts organizations—especially those that have been looking to well-heeled donors—because it will be two, three, or more years before the well-off feel well-enough-off again to make the kinds of philanthropic gifts that they were making in the Bernie Madoff years.

The theory so far, in short, is that our elected officials need to safeguard our quality of life and get going on some construction projects, too.

Can money buy sense?

What can money buy? Roads and sewers and parks and culture, yes.

And then there’s the rest of tomorrow.

There is regional planning to be done so that we plan rationally for realities, the biggest of which is that we will be a smaller community.

There is healthcare planning to be done, in tandem with housing plans and workforce plans, because in a region where over 25 percent of the population will be over 60 in a few years, there will be a big need for age-appropriate housing and for younger people who are trained to help older folks get along.

Our region should get focused today on investing in housing inputs and neighborhood amenities so that older folks stick around in their own houses, in their own neighborhoods, rather than abruptly sell off their homes so that they can either flee or jam into assisted-living centers.

A new politics of community revitalization should be focused squarely on helping that population of older folks stick around in our region, which, like every other Upstate urban region, will have a chance to revitalize if and only if their capital and their talents stay rather than leave.

But if county officials buckle, and if the community lays low, you can bet that the usual ravenous corporate wolves will be at the county’s door, demanding $74.2 million for the usual list of magic-bullet projects, promising instant uplift if only we choose them. You know the list.

Federal policy is raining money on our region. The political class here has a simple job to do: to put the money to work. If they’re not up to the job, what will the community do?

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.