The state-appointed county fiscal control board early this year predicted a $15 million deficit. Erie County will instead end 2007 with a surplus of at least $12 million, budget officials said Wednesday.

The income generated by the 8.75 percent sales tax filled in the cracks. With higher gas prices and Canadian shoppers invading with their beefedup dollars, Erie County is on track to collect $10 million more in sales taxes than budgeted.

Meanwhile, the government will spend about $10 million less than expected, mainly by keeping dozens of government jobs vacant for some part of the year.

Yes, the county had to pay $8.8 million more than planned to Erie County Medical Center under a program to reimburse public hospitals for their losses serving the working poor.

But low-rated Erie County will end a third straight year with its balance sheet in the black, according to budget officials working for departing County Executive Joel A. Giambra.

Giambra wants to leave office saying he left a healthy reserve fund after draining it during the budget meltdown of 2004-05.

His budget director, James M. Hartman, said the 2007 surplus might reach $20 million when all year-end figures are calculated, including December’s sales tax proceeds.

Comptroller Mark C. Poloncarz, who arranges the outside audit that by summer will report the county’s year-end results, isn’t ready to confirm a surplus near $20 million, or even $12 million.

“We know there’s going to be a surplus,” Poloncarz said Wednesday. “I’m not one right now to say it’s going to be more than $6 [million] or $7 million. It could be higher, but it’s going to require the receipt of information we don’t have yet.”

In 2006, when Giambra was talking about a surplus of $27 million, Poloncarz was talking about $20 million. It landed at $23.8 million.

Giambra, in the waning days of his final term, wants to cleanse his image of the budget meltdown that led to the layoffs of hundreds of county workers and placed a state control board over upstate New York’s largest county government.

With the taxpayers’ help, he has avoided a deficit for three years. In 2005, the government jettisoned hundreds of employees and refinanced its tobacco settlement proceeds to end with a $9 million surplus.

Giambra and Hartman believe their final budget, the one for 2008, will also end with a surplus.

But that plan will be overseen by the next county executive, Chris Collins.

Giambra, his words bouncing off the walls of a near-empty office Wednesday, talked for a few moments about what might have been.

He wanted the control board to let a private company buy the right to collect and keep overdue property tax payments, plus the 18 percent late fee the county imposes.

The company was willing to pay 105 percent of the overdue amount, even on properties whose owners can’t be found.

For several reasons the control board balked, and the sale of tax liens to Xspand of Morristown, N.J., still hasn’t happened.

If it had, Giambra says the reserve fund would have swelled by another $20 million and after this year would have reached the $50 million threshold.

County leaders believe that if they can rebuild the reserve fund to $50 million, Wall Street’s credit-rating agencies will lift Erie County’s ranking, which is one notch above junkbond status.

Erie County, which spends about $1.4 billion a year, now holds about $23 million for no purpose other than for a rainy day.

With a 2007 surplus of $12 million, the reserve fund would rise to $35 million.

mspina@buffnews.com

Copyright 2007 - The Buffalo News