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'Hard' control board poised for leave-taking Vote sets July 1 switch to 'advisory' for city

A state-appointed control board that for nine years held the final say over most of Buffalo's finances will relinquish the bulk of its power July 1.

The Buffalo Fiscal Stability Authority on Tuesday voted, 6-1, to shift from "hard" to "advisory" status when the new fiscal year starts.

The move means that the "soft" control board will no longer be empowered with the financial hammers members held over union contracts and other big-ticket expenditures of city government and the Buffalo Public Schools.

Under state law, however, the control board will exist for 25 more years and has the power to move back into a control period in the future, if warranted.

Board member George K. Arthur called it "a banner day" for the authority, which was brought in when the city had problems and helped to solve them. He also credited the work of Mayor Byron W. Brown and his administration, the Common Council and the City Comptroller's Office.

"The City of Buffalo is now on solid ground financially," Arthur said before the vote.

Control board Chairman R. Nils Olsen Jr. cast the only vote against the move.

The board was created by an act of the State Legislature in 2003 as the city faced budget gaps in the tens of millions of dollars. The city also was approaching the constitutional limit for the amount of revenue it could raise through property taxes.

All sides now agree that the city's finances have improved, but for the last few years the control board has warned of long-term fiscal problems still facing the city school district.

The city also is not without its own challenges, including reaching new deals with the police and firefighters unions, which are working under expired labor contracts.

The control board imposed a wage freeze from April 2004 to June 2007, a move that saved the city and the school district more than $150 million.

The board has faced, and has so far survived, legal challenges from unions over the freeze.

One major concern going forward is a $100 million deficit projected by the school district in its four-year financial plan, Olsen said.

That circumstance means the control board's return to hard status will be nearly imminent, Olsen predicted.

The city's other challenges are unsettled union contracts, its history of results in binding arbitration and whether it can achieve the goals of proposed energy savings, he said.

He also pointed to the city's increasing reliance on state aid.

"Hopefully, that aid will continue to increase," Olsen said, "because the challenges facing the city certainly are not over."

A "soft" control board will no longer be able to reject collective-bargaining agreements or impose a wage freeze. It also will not have the power to reject any spending items in excess of $50,000.

City Comptroller Mark J.F. Schroeder has called for the city and the school district to meet the same financial planning requirements that existed under the "hard" control board. A proposed law that would require such plans for the city, sponsored by Council President Richard A. Fontana, was introduced at Tuesday's Council meeting.

Erie County Executive Mark C. Poloncarz, as he has previously declared, supported the shift into advisory mode, though he noted how quickly financial problems can arise in government.

"If it appears that the city is headed in the wrong direction," the control board can go back into "hard" status, Poloncarz said.

Voting in favor of the shift were Arthur, Brown and Poloncarz, as well as Frank B. Mesiah, Frederick G. Floss and Brigid H. Doherty.

Board member Richard T. Jurasek was excused from the meeting, and board member John J. Giardino was absent.

When asked about the district's large projected deficit four years down the line, Buffalo Public Schools Chief Financial Officer Barbara J. Smith said the forecast calls for only minimum increases in state aid. At the same time, Smith noted that the city hasn't increased its contribution to the district since 2006-07.

With the type of financial pressures on the district, there will be significant deficits in the out years every time a four-year plan is done, Smith said.

Brown said he believes that having a "soft" control board sends a better message to potential investors who are considering Buffalo than being in a "control period" does.

"I think this is a big day for the City of Buffalo and for the Buffalo community," the mayor said. "I think by this board voting to go into advisory status, that the legislation calls for, it will help send a very clear message regionally, statewide and nationally that Buffalo has its fiscal house in order and this is a good place to invest."

email: abesecker@buffnews.com