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Bankruptcy Not an Option for Struggling Erie County

By Joyce Kryszak

Buffalo, NY – According to at least one expert, a so-called "bankruptcy" wouldn't let the county shed anything except its reputation.

Technically speaking, Erie County is already insolvent. According to UB's expert on local governance, John Sheffer, the state comptroller made that pretty clear. Sheffer says that's what you call it when the money is gone -- and, with a $118 million deficit, it apparently has been for some time. But he says that's not the same thing as bankruptcy.

According to Sheffer, who is the Executive Director of the Institute for Local Governance and Regional Growth, bankruptcy isn't even an option.

"People think of bankruptcy under the federal bankruptcy law, Chapter 7, or 11 or 13 - that applies to individuals or corporations," said Sheffer. "There really is no such provision for municipalities or counties. The county can't just file a petition declare bankruptcy, go to court and be relieved of its debt."

He says no one should think insolvency means a clean slate with unions either. Some have said contracts need to be rewritten to lower personnel costs. But Sheffer says the Taylor law wouldn't go away.

"I'm not familiar with anything like that that would make the Taylor Law inapplicable to Erie County," said Sheffer.

And at least one union chief says he isn't letting the county off the hook. John Orlando, is President of AFSME Local 1095. Orlando sat shaking his head outside the Rath Building on the warm windy day after hearing the state comptroller's report. Still, he says, no matter which way the wind blows, the Taylor Law will have to be part of any solution.

"No, I'm never going to look past the Taylor Law. That's the only protection there is for people who work in a governmental service," said Orlando.

Still, Sheffer says the county could run out of money. County lawmakers have only two weeks to vote on a plan to borrow money as well as repay the loan. If forcing the action is left up to a control board, that would take time. The county is expected to be out of cash by mid-July.