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Date Posted: Saturday, September12, 01:52:pm
Author: Work session observer
Subject: Re: Incompetent Mayor
In reply to: done 's message, "Re: Incompetent Mayor" on Saturday, September12, 12:14:pm

To supplement today’s Record article, here are some other details from Thursday’s work session discussion about the city’s fiscal crisis. I have focused on two key (related) themes out of a long, complex discussion. I have no way of judging the professional advice given to the council, but I’m hoping somebody else can or knows how to access someone that can. The council has to make a very difficult decision - on very short notice - that could affect all of our futures. They (we) need all the help they (we) can get:

At one point Councilwoman Bello raised the possibility of asking the State Comptroller for help with the situation. Interim City Manager Herbek responded that “they don’t do auditing - I don’t think that’s an option.” Bond counsel Ken Bond added that “they don’t do this - they look at a particular problem.”

Bello continued to press her point about the State Comptroller stating that she is seeking “sound advice.” Bond counsel Ken Bond responded that at the time of the city’s last financial crisis in ‘95, the state required that the city establish a financial advisory board. But in all subsequent such situations, the state has imposed a financial CONTROL board. He cautioned that the priority of such a board would be to pay all bills, and claimed that “Buffalo is finding out things are getting worse.“ He reassured the council saying, “You have a fixable problem.” He added that the Comptroller “is not going to give you a new plan of action.”

A little bit further on in the discussion, Councilwoman Marge Bell raised the issue that “some constituents say it would be better to default - to have the state come in and get to the bottom of what’s been going on here.” Mr. Bond responded that this is a “logical way of thinking but I don’t think that’s the way it works.“ He warned about damage from “bad financial press,“ and argued that default would “make the problem larger.” He stated that some places have filed for municipal bankruptcy instead of defaulting, but claimed that this wouldn’t work for a small city like Newburgh. He advised that the city “can borrow a little bit now and see if the problem goes away,” but if the city “waits till November, it could be in really bad shape.”

Bond’s younger associate cited a Moody’s study of “30 years back.” I suspect he was making an important point but unfortunately I couldn’t hear it. He then warned that a control board can carry a “tremendous stigma in the marketplace.” “Ask friends in Nassau County or Western New York,” he said. He advised that this stigma can lead to “credit problems and higher interest costs.”

Citing the urgency of the situation, Mr. Bond and his associate recommended that the council vote on this matter Monday. But the council decided to hold a public information meeting on Monday and delay the vote till Thursday. (Mr. Herbek suggested the public information meeting as an alternate way to solicit public comment explaining that there might not be enough time to [legally] schedule a formal public hearing.)

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