As the Brown administration’s 2018 capital budget was unanimously approved Tuesday by the Common Council, concerns were raised about a $35 million gap in the 2016-17 operating budget.
Last year, the city budgeted $10 million to balance the 2016-17 operating budget; but in actuality, the city comptroller said, $34.5 million in unassigned reserves is needed to close the books on the fiscal year, which ended June 30.
“Overly optimistic revenue projections, rising expenses and the money-hemorrhaging solid waste fund” are diminishing the reserve fund, said Comptroller Mark J.F. Schroeder.
“Last year, we had $41.9 million in (unassigned reserves). It’s now down to $6.5 million,” Schroeder said, adding that the city has relied too long "on its reserves to compensate for structurally imbalanced budgets" and soon will no longer be able to do that to "fill the holes in its budget.” He said rating agencies have taken note and called it "problematic."
Mayor Byron W. Brown questioned the accuracy of the $34.5 million number, and said the city is not in big trouble financially.
“I am not quite sure if the figure is to that extent. We’ve already implemented some gap-closing measures so we don’t know if the figure is quite that, but we have a plan to address it and that plan is being implemented as we speak,” Brown said, adding that they can use the fund balance "because we’ve been conservative in our budgeting.”
Brown also said his fiscal subcabinet addresses budget issues on a week-to-week basis, and said his administration is taking other measures to address the budget gap. He did not specify what those measures are.
In addition, after the on-going citywide revaluation is completed, it is expected to result in property tax increases for many, which would give the city more revenue.
Parking Commissioner Kevin Helfer, who is also a co-chairman of the mayor’s fiscal subcabinet, said the city knowingly uses the reserve funds to balances budgets, which allows it to keep taxes low and spurs economic development. But going forward, Helfer said, “We know that we’re going to have to be very diligent and make sure we tighten our belt.”
According to the comptroller’s year-end financial report, some of the components that make up the $34.5 million budget gap are:
- $7 million in increases during the year, including $2.9 million to turn the former Michael J. Dillon Federal Courthouse into Buffalo’s public safety complex and $4.1 million to settle judgments and claims;
- $21.28 million in revenues that came in under budget, including $7.3 million from land sales, $1.39 million from a public safety grant reimbursement, $3.36 million in Seneca Niagara Casino revenue held up by a dispute with the state, and $9.21 million in “all other revenues;” and
- $6.68 million in expenses over budget, including $5.21 million in overtime for police and fire, $1.02 million in prior year insurance claims and $440,957 in the solid waste fund.
The solid waste fund, in particular, is hemorrhaging money, Schroeder said.
If the user fees collected by the city from taxpayers fall short, so does the solid waste fund, which means the city has to go into reserves to make up the difference.
Brown said the city is always trying to hold the line on the user fees "to make Buffalo a very affordable city for our residents," adding that it has not increased during his 12 years as mayor, even as other costs have risen.
Also on Tuesday, the Common Council approved Brown’s $22.8 million Capital Budget for 2018. The spending plan focuses on arts and culture, parks and recreation, and infrastructure, as well as improving the delivery of city services and helping prepare residents for the jobs of the future, Brown has said. The recommended budget also would allow the city to continue street and sidewalk upgrades in the Fruit Belt and elsewhere.