Westchester Guardian/Catherine Wilson.

Thursday, November 20, 2008

Catherine Wilson, Bureau Chief
Northern Westchester

Scrutinizing County Executive’s
Proposed Capital Spending

Westchester County is currently in the middle of its annual budgeting process. On Friday, November 14, County Executive Andy
Spano released the County Budget for 2009. The public has only three weeks to review and question this budget before it is presented to the
County Board of Legislators for approval on December 8th. According to the League of Women Voters of Westchester, the schedule for the
public hearings for the County’s budget study sessions are:

Wed., Nov. 19 - Mini-Public Hearing, Yonkers.

Tues., Nov. 25 - Mini-Public Hearing, Peekskill.

Wed., Dec. 3 - Public Hearing, County Board of Legislators Chambers, White Plains.

In addition, the County will Scrutinizing County Executive’s Proposed Capital Spending be hosting a Question and Answer session where the public can meet the County’s Budget Director, Ms. Anne Reasoner, and her staff. That session will be held on Thursday, November 20, 2008 1pm at White Plains Library, 100 Martine Avenue, White Plains Before the budget is submitted to the County Board of Legislators for their approval, it is first reviewed by the Board’s Committee on Budget and Appropriations.

The purpose of this committee is to “review and modify, where appropriate, the proposed County Budget.” This Committee claims that they seek regular input on fiscal matters from the public through public hearings and through monthly meetings of the Citizen’s Budget Advisory Committee.

They meet on the first Wednesday of every month at 6pm in the Westchester County Board of Legislators Committee Meeting Room located on the 8th floor of the Michaelian Office Building at 148 Martine Avenue in White Plains. The public is invited to attend these meetings. The next meeting of this Committee will be on Wednesday, December 3rd.

According to the County’s Budget Department, the Board of Legis-lators designates the Committee of Budget and Appropriations as the
lead Committee for the review of the County Executive’s budget submission. The budget is also submitted to the Board of Legislators’ audit firm for an independent review. However, while Westchester County has two budgets currently up for public review, the Operating Budget (day to-day operations) and the Capital Budget (major long-term projects and investments), only the Capital Budget was available online at press time for the public’s review.

In his proposed capital budget for 2009, County Executive Andrew Spano acknowledges a bleak forecast for next year and notes, “My
proposed Capital Budget is 19% less than last year’s, representing a $21.7 million decrease”. However, what Mr. Spano fails to note is that any projects approved in prior years affect the current year’s Operating and Capital Budgets.

Since the County borrows and/or issues bonds to finance budgets with terms up to 20 years, any County budget for the past 20 years may still have an impact on current spending. While this year’s $93,176,000 proposed capital budget is indeed less than the $114,880,000 budget in 2008, the impact of the $114 million authorized in 2008 is affecting our County’s current 2009 Budgets. Government capital budgets
can be used to determine fiscal policy, to improve the government’s net worth, and aid in economic development. Since most capital
projects are long-term, such as the construction of a bridge, they are usually financed by debt or external aid rather than through increases in
taxes. Capital budgets should plan for and cover all four stages of each proposed project: planning (setting goals and objectives and considering alternatives), budgeting (selecting projects to be developed, and determining financing), implementation (procurement, monitoring
and oversight of projects), and “ex post” audits (evaluations of the actual impact of projects). According to the International Monetary
Fund, “Experience shows that in the absence of properly organized capital budgets, governments resort to borrowing without due consideration of the sustainability aspects, assets are inadequately maintained, and major projects suffer from overall poor management and performance.”

The IMF also notes that the investment/project proposals need to be appraised in terms of both capital and operating costs, such as
interest costs on debt needed, costs to maintain acquired assets, etc. In addition, the IMF recommends that governments set targets
to limit their level of debt. The County notes on its budget website that it has a borrowing capacity of up to $11,453,604,375 – that’s
over $11 BILLION dollars – based on a County real estate value of $163,622,919,651, meaning the County is basing how much it can
borrow on the value of local property, values that are declining.

As of September 1, 2007, the latest date for which figures are available on the County site, the County’s total debt was $748,089,787. The
total interest due on all outstanding County debt is $217,403,429; this is the total of all payments due through 2038. It does not include
any interest payments on any additional debt approved by the County for 2009 in the proposed budget. As it stands, the County is burdening future generations with almost a quarter of a BILLION dollars in interest payments alone. Yet nowhere in the County’s budget does it note what targets our local government has set to limit the level of debt.

During the Great Depression, capital budgets concentrated on ensuring economic recovery. Several governments used public funding
to create self-financing assets leading to increased net worth. Those “investment” budgets were replaced in later years by a dual budget approach where normal expenditures in operating budgets were simply shifted into the capital budgets providing a convenient way for governments to reduce their deficits while justifying a rationale for borrowing. The IMF warns that if governments do not integrate their capital and operating budgets, they could end up with unsatisfactory balances between current and capital spending, e.g., developing new hospitals, but having insufficient trained staff or inadequate maintenance and funding for utilities. Westchester County, however, issues its Capital and Operating Budgets separately, with no documented integration between these budgets.

Mr. Spano alleges, in his presentation to the Board of Legislators, that his administration continues “to review every item with an eye
towards eliminating or delaying anything which is not absolutely necessary.” He further asserts, “The programs in this Capital Budget
reflect this policy. That is why we are able to reduce spending by 19%”. The Guardian reviewed every line item in Mr. Spano’s proposed
Capital Budget and found this statement to be misleading. Many of the “savings” for 2009 are simply postponed to 2010 and beyond,
meaning the taxpayers will still absorb the costs, they are just being deferred until after the County Executive’s re-election bid next year.

A review of the Capital Budget revealed that the proposed capital projects given to the Board of Legislators for their approval do not contain
sufficient information for them to make a decision.

Full Disclosure


This reporter was the Budget Manager for Reader’s Digest, handling multi-billion dollar operating and capital budgets. The County’s
project descriptions lack:

1. Alternative solutions, including the option of doing nothing;

2. Annual costs and any revenues for the full life of the project;

3. The types of financing for the project and full cost disclosure for each alternative, any future costs or project stages beyond the five years
presented in the Capital Budget;

4. Audits of the previous project stages to determine feasibility of the future stages, and any changes that may need to be made to the original
proposal;

5. A full assessment of the needs, opportunities, and resources;

6. A confirmation of how the proposed project conforms with the County’s long-term Master Plan and investment strategies;

7. The priority ranking of the project;

8. A statement of compliance with all local, state, and Federal laws and regulations including safety and environmental standards;

9. A statement of compliance with the County’s “Best Practices” standards;

10. Causes no negative impact on other County projects or interferes with local, state, Federal projects, or any individual, system, policy, law, or regulation;

11. An audit trail of signatures of all individuals authorizing their approval of the project in accordance with documented County procurement, fixed asset, inventory, and capitalization policies;

12. Any other issues that would have the potential to impact the project, or any issues that have the appearance of impacting the project;

13. Copies of all bids, proposed contractors, approved suppliers, etc.;

14. Any conflicts of interest among contractors, suppliers, legislators, and government officials regarding this project, including political support, ownership of assets, etc.;

15. A statement that the budget and financing determinations are in compliance with all accounting regulations set by the Government Accounting Standards Board.

Without all of the above information, the Board of Legislators cannot know if the projects have been thoroughly analyzed, can cause potential harm to the County and its residents, or will incur future costs or difficulties. For example, the GASB has set a new accounting
requirement affecting how all governments will report their fund balances, the difference between the County’s assets and liabilities. This
balance is used to identify the available liquid resources that the County has to repay its long-term debt, to add new government programs, or
expand existing ones. The GASB regulation calls for governments to isolate their fund balance into the portion that is restricted, for specific purposes only, limited, earmarked by County ordinances, assigned, e.g., funds for computer purchases where a total budget amount is assigned, and unassigned, general purposes. This regulation is to take effect in June, 2011 and all government financial statements at
that time must adjust all of their prior year information presented.

Therefore the current 2009 budget will eventually have to comply with this new GASB regulation, yet no mention of this is made in the Capital Budget and the fund balance does not yet reflect the new regulation. According to the County’s Balance Sheet, as of September 1, 2008, its fund balance is a negative $58,231,357, as follows: The County only has $35,185,628 in assets in its Capital accounts, but owes $93,416,985. The Guardian’s review of this budget revealed other issues and concerns as well. The 2009 budget calls for $6.3 million in modifications to the Department of Public Works facilities, Project #B0071, including upgrades to heating and air conditioning, yet makes no note of any alternative energy sources or green alternatives that were considered.

• Project B0080 calls for $14 million in renovations to the Hilltop Hanover farm, spread out through 2013. This farm was purchased in 2003 by the County for “agricultural preservation, drinking water protection and the promotion of environmental stewardship through demonstration projects and programs for sustainability”, yet the November calendar for this County farm only lists two activities: A knitting
class on November 15th, and a hike on November 28th. Does such limited use justify an additional $14 million in expenditures on top of
the annual operating costs for this farm? How many Westchester residents even know this exists?

• Project B0081 calls for a $1.4 million rehabilitation of the County’s record center, a 50,932 square foot facility in Elmsford. An article
last August in The Guardian lauded how the County Clerk’s office is transferring all of their paper files to digital records with significant savings to the taxpayers. So why isn’t the County using these proposed funds to get rid of the paper it’s storing and eliminate the need for this building completely? Why is the County rehabilitating a building that provides an antiquated and inefficient service? And, why did the County purchase 450 Saw Mill River Road, Ardsley, at a certain cost of $14 million and possibly as high as $20 million before it is totally rehabilitated and outfitted?

• Project B0084 calls for emergency generators at several County sites to “provide the necessary response and emergency services needed during a natural disaster, terrorist act or long-term power outage”. Yet the bulk of this $4.5 million project is deferred into 2010, only $540,000 is being requested for 2009. Isn’t safety a top priority for the County’s Capital Expenditures? And, if these generators are truly to
provide responses to a terrorist act, why, then, does this project make no mention of seeking Homeland Security funds for this?

• Project BFT05 calls for a new fire training center to simulate conditions “typically found in a commercial strip mall”. These funds are
being deferred into the 2010 budget. However, no mention is made in this project of the amount of use this training center would receive.
If there is considerable downtime, could this center be leased to other fire districts outside of the County? Do neighboring counties have a
similar training center that Westchester County could use instead of building a separate facility? Can these training facilities be consolidated
among all the counties in the lower Hudson Valley?

• Project BIT3A calls for $1.2 million each year, for the next three years, for the purchase of replacement computers and estimates an
approximate cost of $1,200 per computer. Given that personal computers now sell for less than $500 each for a basic system, why does
the County need to budget an average of $1,200 for their equipment? Does every employee need an elaborate system? Can these computers
be purchased in bulk, possibly in consortium with neighboring counties and local municipalities? The project proposal presented to the
Board of Legislators does not address these issues. It does, however, beg the question, “What ‘fat cat’ is lining his pockets?”

• Project BIT20 calls for $1.5 million in 2010 for “the purchase and installation of broadband wireless network equipment at access points throughout the County”. What’s wrong with the wireless systems already setup by the telephone companies? Why can’t County employees
use the T-Mobile and Verizon systems? And, what about the $22.5 million spent, over five years, from March, 2000, in a no-bid contract with Lightpath, a wholly-owned subsidiary of Cablevision? That system has been so poor that we waste four County police cars every day that stand parked, at the ready, at 148 Martine Avenue. And, incidentally, is it merely a coincidence that Norm Jackness, who set up that system, now participates in Lightpath commercials?

• Project BLA01 allocates $35 million for land acquisition for parks; Project BLA03 allocates an additional $4.5 million for development
rights. Given the significant amount of County parks in existence, this program would appear to be a low priority at present. The project request also does not note alternative measures to obtain this land such as through land gifts from local residents or funding from “Friends of Parks”, a County nonprofit organization earmarked for local parks and recreation needs.

One would wonder what Commissioner Stout, and his Special Assistant who, between them, pull down more than a quarter of a million dollars annually, might be capable of coming up with in this regard? Perhaps after budget season, it might be a good idea to look into the operations of Friends Of Parks, but I digress.

Several projects call for funds for the determination of long-range plans, budgets, and audits. Why aren’t County employees used for these
plans? None of these projects note which companies are under consideration to be hired, or their connections to any elected representatives and any possible conflicts in the outcome and implementation of these plans.

• Project BPL07 has $1.3 million “under review” for aerial photos and digital mapping of the County. Hasn’t the internet already covered this with Google Earth and Yahoo maps? Can’t we already look into our neighbors back yards via our home computers?

• Project BPL10 allocates $25 million for affordable housing over the next five years. However, this project does not note alternatives
like the rehabilitation of existing properties, especially abandoned and foreclosed homes to prevent community blight, not to mention
numerous houses owned by the County on County park grounds.

• Project RCP7C calls for $1.8 million for the rehabilitation of camping sites at Croton Point including 20 sites for recreational vehicles.
is project does not note how many of the RV campers, if any, are actually County residents. Since it is highly unlikely that a local resident would drive an RV to a County camp site, these expenses could conceivably be only for the benefit of non-residents.

The County is planning to spend $231,956,000 for parks and recreation over the next five years, of which $50,981,000 is for Playland
and $22,525,000 is for the County’s golf courses. Yet only $396,000 has been allocated for creating accessible walkways and pathways in compliance with the Americans With Disabilities Act, and even that is being deferred until 2010. Once again, re-election year, 2009, is being given deferential treatment.

If the County can afford to spend $2 million for golf course path rehabilitation, $1.2 million in 2009 alone, Project RGC18 for able-bodied
individuals, why isn’t accessibility an equal, if not higher, priority for the County’s budget?

The Guardian encourages its readers to voice their opinions of the County’s Capital Budget either at the public hearings, or by contacting
the Budget Committee directly.

The Chair of this Committee, Jose Alvarado, is an accountant, and therefore has both a fiduciary and a professional responsibility to the
taxpayers of this county. He may be reached at 914-995-2846. According to the Board’s website, the other Legislators on this Committee are: Thomas Abinanti: District 12, 914-995-2821
William Burton: District 9, 914-995-2812
Peter Harckham: District 2, 914-995-2810
Ken Jenkins: District 16, 914-995-2829
Michael Kaplowitz:District 4, 914-995-2848
Judy Myer: District 7, 914-995-2802
George Oros: District 1, 914-995-2828
Martin Rogowsky: District 6, 914-995-2834
Bernice Spreckman: District 14, 914-995-2815
Lyndon Williams: District 13, 914-995-2837

In addition, The Guardian readers may email any of the above representatives through the Board’s web site at http://www.westchesterlegislators.com/. Any capital expenditures our local legislators approve for 2009 will impact our economy for years to come.