At $84 million, Erie County debt lowest in 12 years

At a glance: Erie County's debt• Entering 2015, Erie County's total debt equals $84 million, the lowest since 2003.• The $84 million represents a 27 percent drop compared to $116 million — a record amount — in debt Erie County accumulated in 2008.• Erie County commissioners reduced debt by forgoing many costly and questionable projects since 2008.ouriel@sanduskyregister.comAbout a decade ago, Erie County commissioners shared the same financial mentality as many college students do:Spend recklessly, forget about saving and worry about the cost consequences later on.The questionable and worrisome budgetary habits resulted into commissioners racking up a record amount of debt, totaling $116 million in 2008.But in 2009, it's as if commissioners enrolled in a Business 101 class, learning the ramifications of debt and immediately addressing the negative balances.So to rescue taxpayers, drowning in red ink, commissioners opted to stop borrowing millions of dollars for unnecessary and controversial projects.And when this occurred, they finally became accountable to all 77,000 or so county residents.The end result?Since 2008, commissioners have slashed the amount they owe to other institutions by 27 percent.The county's debt entering 2015 totals $84 million, according to financial data the Register obtained through a public records request.At $84 million, the figure is the lowest debt total for Erie County since 2003."Over the last several years, we have been very careful in investing in any new projects, making sure that there is a return for the taxpayers on their investment," Erie County commissioner Pat Shenigo said.Shenigo added: "The downturn in the economy caused us to re-examine our spending habits and work with greatly reduced revenue sources. By reducing expenses, and prioritizing new projects, we have been able to reduce the county's debt substantially, a practice we plan on continuing in the future."Debt typically accumulates through officials borrowing money for major multimillion-dollar infrastructure projects.Banks, financial companies or other government operations then charge interest on the principal amount to make money off a loan.Drowning in debtAbout 90 percent of the county's total debt derives from water, sewer and landfill operations.Critics contend negligent financial planning and foolish decisions involving infrastructure projects — water pipes, sewer lines and a landfill expansion, among others — greatly contributed to the county's debt.These projects resulted in the debt skyrocketing from a paltry $22 million, relatively speaking, in 1990.Commissioners also burned through $10 million in savings from 1998 to 2008, draining almost all of the funds kept in a reserve account necessary for emergency situations. A robust savings account also helps officials borrow money at lower interest rates.Erie County commissioner Tom Ferrell, first elected in November 1988 and in office ever since, served on those previous commission boards approving the debt-escalating projects.Ferrell has argued the projects creating debt have actually provided many valuable assets to county residents, such as potable water in rural areas.But the other two present commissioners, Shenigo and Bill Monaghan, have disapproved of past decisions leading to gigantic purchase orders on what they consider ill-conceived projects. Monaghan entered office in 2007 and Shenigo started in 2009.Among the head-scratchers occurring during previous terms preceding Monaghan and Shenigo but during Ferrell's tenure, commissioners:• Approved a $21 million, 30-acre expansion at the landfill about a decade ago. Many said the mammoth pit is too large for areas 10 times the size of Erie County. The large hole created both debt and annual deficits for years.• Building an $18 million water line project to serve rural residents about a decade ago. Only a fraction of residents tapped into the new line, far fewer than expected.• Spending $500,000 for farm property that was to be used for a would-be technology center in 2007. The land was later found to be ill-suited for construction.New debt?Without adding any new debt, commissioners could write their final check on this borrowed money in about 30 years.But not all debt is bad."Providing water, sewer and solid waste disposal services are capital-driven operations requiring significant dollars to be invested in those infrastructures," Erie County administrator Pete Daniel said. "All communities that operate these kind of services must resort to borrowing money. While we've been fortunate for not having to make any of these large investments lately, the time will come for that to change."It's not known exactly what possible projects could happen in the near future."Funding to replace aging infrastructure is a national issue, and we will not be immune to it, however, we plan to match any new borrowing up with retiring debt so the budget remains cost-neutral," Daniel said. This "helps us avoid any significant future rate increases to our current users."What could $84 million buy?Despite substantially lowering Erie County's debt to $84 million, that is still a huge chunk of cash.What $84 million could cover:• The entire payroll of the 2014 Cleveland Indians.• The net worth of comedian Eddie Murphy.• The recent payment Royal Dutch Shell made in a landmark settlement to a fishing company, compensating two major oil spills happening in Nigeria in 2008.