Erie County ended 2005 with a $9.4 million surplus that led to an accumulated general fund balance of $14.4 million, Comptroller Mark C. Poloncarz said Friday.

But short-term relief is no indicator of long-term comfort for a government that is struggling under control board scrutiny after nearly collapsing in early 2005, he said.

The surplus was achieved only after county spending was reduced by $80 million a year, more than 1,000 employees were laid off and the sales tax was increased by .25 percentage points, Poloncarz noted.

"While the 2005 results are positive," he said, "we must keep in mind that the county needs to re-establish a significantly higher fund balance to meet the requirements of the four-year financial plan and, more importantly, to attain credit rating upgrades."

Only by doing so will Wall Street be assured "that Erie County is serious about re-establishing our credit," the comptroller added.

In announcing results of the 2005 audit, Poloncarz said the county's use of tobacco settlement funds to close its 2005 operating deficit increased total debt service to be paid over the next 50 years by $121.9 million and "resulted in a total long-term economic loss of $31.4 million at net present value."

The public corporation handling the settlement proceeds issued $318.8 million in bonds that in effect "advance-refunded" $239 million in outstanding bonds and allowed $90 million to be transferred to the general fund to help close the deficit, he said.

Deficit-reduction options that were considered but rejected, Poloncarz said, included:

• Doing nothing, which would have left the general fund about $80 million in the hole;

• Asking the control board to issue a deficit bond with a term greater than five years, which was beyond the board's authority;

• Requesting special state legislation to let the county issue the deficit bond.