Shy on financial specifics for taxpayers, Rockland County Executive C. Scott Vanderhoef hastily outlined his plan yesterday to sell the assets of the county’s Summit Park nursing complex to a public benefit corporation and to provide $18 million to balance the 2011 budget.
In last night’s special legislative session, Vanderhoef admitted that the County was in dire financial straits and awash in debt (note: Rockland County has the second highest debt per capita among New York State Counties). Wholesale department cuts or employee furloughs, equaling 11.5 percent of their pay are looming, according to Vanderhoef, if the Summit Park sale does not go through.
The Summit Park Nursing Home is one of Rockland County’s few marketable assets and it actually generates money for the county. Its sale would take it off the county’s books, but taxpayers will still foot the bill for its operations. Furthermore, sale to a third party would virtually dissolve the Civil Service Employees Association as a bargaining unit for the facility’s unionized employees.
A public-benefit corporation (PBC) is an organization chartered by the state that performs some public benefit. PBCs borrow from both municipal corporation law (that is, the laws responsible for forms of municipal government) and private corporations law.
Thus, PBCs operate like quasi-private corporations, with boards of directors appointed by elected officials and not by voters. So, despite taxpayer dollars either going directly or indirectly to the PBCs, they are not accountable to those very taxpayers. And, without the approval of taxpayers, a PBC can issue its own debt and may bypass limits on debt set by the New York State Constitution. They can also avoid regulations applicable to government agencies, which often leads to fiscal abuse. Alarmingly, PBCs often make risky capital and infrastructure investments, but do so without directly putting the associated municipality’s credit rating on the line. However, when PBCs fail’€”and its a fairly common event’€”it is usually the government entity that sponsored the PBC that is responsible for the bad debt. Currently, the thousands of PBCs existing in New York State are responsible for more than 90 percent of the State’s total debt load.
The proposal to be voted by the County Legislature today is called PBC Home Rule Legislation. Legislators are not being asked to approve the actual sale of the facility, but to formally request that the New York State legislature allow for the creation of a public benefit corporation. If the State allows it, the County Legislature would later vote on the sale of Summit Park to an outside group. Approval by the State legislature is not guaranteed and may even be problematic. Lawmakers on both sides of the aisle, along with Governor Andrew Cuomo, are quite wary of public benefit corporations. Many of them believe that they create too many levels of unaccountable government.
Vanderhoef also asked that the legislature pass an $18 million deficiency note’€”tied to the sale of Summit Park’€”that would allow the county to borrow the money needed for this year’s operations. If the PBC Home Rule passes, the deficiency note will allow the county to immediately take on the additional debt, even if the sale of Summit Park doesn’t happen.
One County Legislator flippantly blew off the PBC Home Rule legislation as “non-binding,” but it can actually set off a cascading sequence of events, eventually forcing the legislature to sell the facility. Should the PBC Home Rule and deficiency note pass, the additional debt taken on by the county can ultimately create a situation of legislative blackmail, where the County Legislature little choice but to vote “yes” on the sale of nursing facility to pay off the note, which would be due in one year.
The legislature asked that Vanderhoef attend last night’s special session to answer their concerns over the potential sale and the Home Rule legislation. But Vanderhoef only gave a very brief introduction of the concept, and turned over the task to Deputy County Executive Sean Mathews before leaving from the room.
Matthews presented the alternatives to the sale, but Legislature President Harriet Cornell and other legislators were upset that none of these options were presented before the County Legislature when they approved the 2011 budget in October of last year. Options outlined by Mathews included drastic cuts in county services; worker furloughs; increased property, sales, and mortgage taxes; and the introduction of a 3 percent hotel tax. Departments on the table to be cut included Environmental Resources, Tourism, Human Rights, the Youth Bureau and many Sheriff’s department functions, such as the mounted patrol and river patrol.
Notable in their comments to Matthews were Legislators Alden Wolfe and Connie Coker.
Wolfe pointed out that while the sale of Summit Park might might sense for the County’s books, it remains to be seen if the creation of a PBC would be good or bad for Rockland County taxpayers.
“I don’t have blinders on,” said Wolfe. “I know that we have problems. But to be told that we have to approve this or else…? I don’t feel comfortable about it.”
When Matthews countered that the county had an $18 million hole that had to be filled, Wolfe fired back, “But this proposal is the doomsday plan; this isn’t about what taxpayers can expect to gain from the Public Benefit Corporation. Can you tell me how does this benefit the taxpayers going down the road?”
Wolfe’s question was not answered by Matthews, who continued to talk of grim cuts to the county’s infrastructure.
Coker made it clear that she was upset that Vanderhoef left the meeting quickly, passing the buck to Matthews. She then posed a question to Matthews:
“If we vote yes on this, are some of us doing this just to get an infusion of cash in the county? And, if we get the deficiency note and then not sell the hospital are we then on the hook for this additional debt? Will we have more debt?”
To all of the above, Matthews meekly answered “yes.”
Together, Wolfe’s and Coker’s comments touch on some of our concerns of how risky the venture this process of selling off the nursing home can be. A county that is plagued with debt and can’t find a way to pay its bills now wants to take on additional debt to back a sale of a public facility that might not even happen? What’s wrong with this picture? Further, this sale seems to be a hasty, one-time fix to a perennial budget problem.
The sale of the nursing home might provide a temporary fix to Rockland County’s bottom line, but no one in Vanderhoef’s entourage has described’€”even when asked directly’€”the impact that it will have on taxpayers. This, is worrisome. Furthermore, we may soon find ourselves saddled with a quasi-governmental entity and a board of directors that we cannot vote out if we find their performance unacceptable. Is that what you’d call a democracy?
A version of this article can be found on Left of the Hudson: Progressive News and Views for the Lower Hudson Valley.