Ellis Under the Microscope

At the end of this article, it seems like James the Turd wants to throw his ol' buddy under the bus...

Hoeffel, Ellis square off on bonds
Ex-chairman denies that his advice has cost county money
By MARGARET GIBBONS, Times Herald Staff

COURTHOUSE — Democratic Montgomery County Commissioner Joseph M. Hoeffel III Thursday claimed that Republican Thomas J. Ellis, the former commissioners’ chairman, is to blame for the $1.9 million the county has had to spend this year to re-do risky bond issues undertaken by the prior administration.

Denying that his attack was partisan, Hoeffel told Ellis, “I have concluded that the problem was your aggressive approach and that it is costing the county $1.9 million this year.”

This does not include the higher interest rates the county was paying on the three bond issues that were taken out under auction rates instead of fixed or variable rates, said Hoeffel. Those calculations still must be made, he said.

Ellis, a bond counsel by profession, defended his advice to the prior administration, both as a commissioner and commissioner-elect, that resulted in some $30 million in debt savings that paved the way for two years of tax decreases.

The market is not always predictable in these times and no one was predicting that auction rates would soar as they did in January, according to Ellis.

“You cannot be a pig and always win,” Ellis told Hoeffel, adding that sufficient safeguards were in place to enable the county to come out of the auction rates and go to fixed or variable rates. “We saved a fortune by going to auction rates.”

Again, there were no figures to compare the savings generated by the auction rates in comparison to the fixed or variable rates in place at the time of the bond issues.

“We are in great shape, so don’t tell people the sky is falling because it isn’t,” said Ellis.

The sparring between the pair came after the commissioners passed a final ordinance wrapping up a three-phase plan to place all of the county’s debt that was at auction rate interest into financing involving fixed and variable rates.

Of the county’s approximate $372.2 million of debt, some $130 million of these borrowings were in auction rates.

“What this is all about is politics,” said Ellis, this year’s GOP candidate for state treasurer.

Not true, said Hoeffel.

Hoeffel explained he initiated his line of questioning to determine whether the county had been receiving poor advice from its financial consulting firm and to learn from past mistakes.

When Hoeffel suggested that Ellis respond to questions in a less political fashion, Ellis said, “You are acting like a politician so I will talk like one.”

Ellis went on to criticize Hoeffel for his actions in a previous administration headed by Republican Mario Mele with whom Hoeffel had also formed an alliance.

“This county was left in horrible financial shape,” said Ellis, claiming that the county came close to losing its unique Triple A bond rating at the end of that administration.

Hoeffel responded that the Republicans controlled those previous administrations and that it was unfair to blame him for its fiscal problems.

Commissioners’ Chairman James R. Matthews at one point suggested that Ellis should back off, explaining he was only called upon to offer his comments on the technical aspects of the prior bond issues, not to engage in bickering with Hoeffel.

When Ellis persisted, Matthews moved to gavel him down. However, Hoeffel stepped in, advising Matthews, “Don’t use your gavel against a former commissioner. That would be stooping to a new low in Montgomery County.”

At the end of the “discussion,” Matthews referred to it as a “positive exercise.”

“Knowledge is good, information is positive,” said Matthews.

Margaret Gibbons can be reached at mgibbons@timesherald.com or 610-272-2501 ext. 216.