BUFFALO, N.Y. -- A few months after trumpeting the county was sitting on a large surplus, Erie County Executive Chris Collins is now potentially facing a large, looming deficit for his next budget.

The question is whether he can balance the budget with deep cuts, or whether the possible shortfall will lead to a property tax hike in 2011.

While Collins (R) has long warned of fiscal "storm clouds" gathering in the future, the budgetary squall may be coming a bit sooner (and stronger) than he had hoped.

"Relative to the rest of the state, Erie County is in the best shape of any county there is," Collins said. "But these storms clouds are everywhere."

Although Erie County finished 2009 with a surplus in excess of $40 million, the county executive has used a large portion of the money to eliminate some of the county's bad debt and to replenish its required reserves. Collins also set aside some money to help offset a 2011 tax hike.

The problem is that much, if not all, of that surplus came from federal stimulus dollars in the form of direct Medicaid relief.

Based on assurances from U.S. Senator Charles Schumer (D-New York), Collins had initially planned on receiving another $20 million in federal relief that he could apply to the 2011 budget, which he must submit by mid-October; however, it seems increasingly likely that Congress lacks enough votes to approve the extra money.

Additionally, according to the comptroller's office, the county could receive about $16 million less in both sales and property tax revenue than it had expected.

Both issues leave the county, which had already anticipated some belt tightening for 2011, a total of $36 million dollars short of what it had recently expected.

REPORTER: Can you guarantee the people of Erie County that there will not be a property tax hike in the next budget?

COLLINS: Yes. I am not going to raise the property tax rate beyond the $5.08 (per $1,000) that it is today. We are going to cut where we have to cut to maintain the tax rate.

Collins is asking most county departments to trim 20% from their payroll expenses for the 2011 budget.

Erie County Comptroller Mark Poloncarz (D), who last year warned the Collins Administration about its sales tax revenue projections, said most departments were cut to the bone during the budget crisis.

"The question arises, when do you get to a point where you're so lean that you can't provide the services that people want and need?" Poloncarz asked.

The Comptroller suggested Collins keep all options on the table.

Some department heads, including Erie County District Attorney Frank Sedita, told 2 On Your Side that his department is already as lean as D.A. offices come in New York, and that he has serious concerns about his ability to perform the office's constitutionally-mandated duties, if the county executive insists on a 20% cut.

REPORTER: Are you concerned that some departments simply can't lop 20% off the payroll and function correctly?

COLLINS: It's not one-size fits all, even though the target is 20 percent. There are certain programs that we're not going to be able to touch.

Collins said Medicaid-mandated programs are unlikely to see significant cuts. He also noted that staff at the county jail and the D.A.'s office, which also perform constitutionally-required duties, will not be cut the same way as other departments.

Copyright 2010 WGRZ