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What 'market access risk' means for Erie County

Politically charged debate over who should do Erie County's borrowing has been around almost as long as the state-appointed control board.

It's been no different this year, as County Executive Mark C. Poloncarz and County Comptroller David Shenk prepare to sell the county's first general obligation bonds since 2006.

There are six legislators -- including three Republicans, one Democrat, one Conservative and an Independence Party member -- that have been outspoken in their opposition to the plan because of the higher costs Erie County will see if it borrows on its own.

Staff for Poloncarz have made the argument that returning to the bond market will help the county get better ratings from the Wall Street ratings agencies in the future, which in turn would mean cheaper interest rates.

A story in today's City & Region section looks at what analysts from the ratings agencies had to say about that.

Pressed by county legislators for written documentation that the ratings agencies look at whether the county has issued its own general obligation bonds when they determine what rating to give, the Poloncarz administration has pointed to a line in a ratings report from Standard & Poor's completed in December.

In it, analysts note that one of the risks facing Erie County is: "Market access risk for purposes of financing operations during low cash-flow periods."

So what does that sentence mean? It is a comment on the county's low cash flow.

Analysts for Standard & Poor's said that refers to the fact that the county must rely on short-term borrowing each year to cover some of its finances, a tactic many municipalities without a lot of extra cash use to cover expenses as they wait for revenue to arrive.

"What that's referring to is the fact that the county issues cash-flow notes each year to finance operations," said Lindsay Wilhelm, primary Erie County credit analyst for Standard & Poor's. "So basically, during low-cash periods, they'll have to go out to the market to just finance their day-to-day, and we see this a lot. This is definitely not unique to Erie County."

Why is that a risk? Because, in an extreme credit crisis, a county might not be able to borrow that money -- a scenario the analysts said they don't currently foresee.

"They might not be able to sell the notes if there was a real financial meltdown of epic proportions," said Richard Marino, an analyst for Standard & Poor's. "You can sell notes, even if you have weak credit, you can still sell them. It just costs you more."

-- Denise Jewell Gee

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Robert J. McCarthy

Robert J. McCarthy

A native of Schenectady, Robert J. McCarthy came to The Buffalo News in 1982 following a six-year stint at the Olean Times Herald. He is a graduate of St. Bonaventure University, and has been covering local, state and national politics since 1992.

rmccarthy@buffnews.com


Tom Precious

Tom Precious

Tom Precious joined The Buffalo News in 1997 as bureau chief at the state Capitol, where he covers everything from statewide politics and state government fiscal affairs to health care, environmental and municipal government matters. Prior to The News, he worked for news outlets in Albany and Washington, DC.

tprecious@buffnews.com


Jill Terreri

Jill Terreri

Jill Terreri is an Amherst native and has covered politics and government in upstate New York since 2003. She joined The Buffalo News in 2012 and covers City Hall.

@jillterreri | jterreri@buffnews.com


Jerry Zremski

Jerry Zremski

Jerry Zremski, The Buffalo News Washington bureau chief, has reported from the nation's capital since 1989 after joining The News as a business reporter in 1984. A graduate of Syracuse University, Zremski is a former Nieman fellow in journalism at Harvard University. In 2007, he served as president of the National Press Club.

@JerryZremski | jzremski@buffnews.com

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