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Buffalo, faced with an immediate need for cash and near insolvency, is preparing to lay off employees, freeze capital spending, eliminate non-union pay raises and close two fire companies on a rotating basis.

The cuts are the city's first response to a $54 million revenue gap created by the late state budget.

"This has the potential to bring this city down," said Mayor Anthony M. Masiello.

But he insisted: "We're not going to let this city go bankrupt."

Masiello, with the city comptroller and Common Council leaders at his side, unveiled a laundry list of cuts designed to save the city up to $7 million during the current fiscal year.

The city also wants the state to advance it $48 million in aid that otherwise would not arrive until next year. City officials say they need the cash by November to pay normal, day-to-day bills.

"That would give us the breathing room we need," said Comptroller Anthony R. Nanula during a meeting with reporters and editors at The Buffalo News. "You can't pay bills without cash in the bank."

Even if the state comes through with some short-term financial help, Masiello plans to proceed with budget cuts. They range from a hiring freeze to the layoff of up to 230 temporary and provisional employees to the closing of two fire companies each day on a rotating basis.

The first two closings will occur today: Engine 16, one of three companies at the busy Jefferson Avenue and Kingsley Street fire station, and Ladder 15 near Clinton Street and Bailey Avenue.

Those companies will reopen Sunday and two others -- Engine 21, also at Jefferson and Kingsley, and Ladder 11 at 638 Fillmore Ave. -- will close for the day.

Eager to find other savings, City Hall also wants its unions to accept a wage freeze and plans to ask the state to suspend binding arbitration until the financial crisis is over.

And finally, the city will freeze spending on about 100 capital projects scheduled for this year and next.

The projects range from big-ticket items like the $24 million reconstruction of Main Street to smaller projects like the $450,000 in improvements planned for McCarthy Park.

"It's a strategy for survival," said Council President James W. Pitts. "What we're saying is that upstate New York is in trouble. Buffalo, the state's second-largest city, is in trouble."

The city's doom-and-gloom plan is directed at persuading the state to move quickly to help Buffalo and other upstate cities in trouble.

More cuts possible

The delays in getting a state budget approved have been compounded by the Sept. 11 terrorist attack in New York City. State officials say the attack and its corresponding costs have left them wondering how much money they may have for the other municipalities and school districts in the state.

Buffalo, for example, is operating under a budget that assumes an additional $31 million in state aid. City school leaders want an extra $23 million on top of that.

Without that money, Buffalo would have to make more cuts or raise property taxes. City officials say Buffalo is very close to its legal taxing limit and only has about $21 million in taxing authority left.

"I don't think a tax increase is something we can contemplate," said Eva Hassett, the city's commissioner of administration and finance.

The city also may run into roadblocks trying to persuade union leaders of the need to freeze wages. Lt. Robert Meegan, president of the Police Benevolent Association, said his members have worked without a contract for 15 months and have no intention of accepting a wage freeze. He also criticized Masiello for unveiling his plans to the media and public before giving them to union leaders.

"I don't think the mayor likes collective bargaining," Meegan said. "He would prefer it be collective begging."

The city's most immediate need is cash.

Nanula said the city's general fund reserves dipped as low as $1 million at the start of the current fiscal year in July. That compares with an average of about $44 million in prior years.

Officials blame the cash crunch on several factors, including delays in receiving state aid, costs associated with settling the teachers contract dispute and fund transfers that were approved this summer to hold down water rates.

The long-term outlook is further clouded by uncertainties over whether the state will honor Buffalo's request for $31 million more in aid.

Masiello pessimistic

At this point, Masiello is pessimistic about the extra aid, which includes $19 million in "spin-up" aid received last year.

"I'm getting indications that we may not get any of it," the mayor said Friday.

If that happens, more cuts are likely, including the potential layoff of permanent, nonessential employees, he said.

"That would be very harmful and hurtful," Masiello said, "but if we don't get the money we need, more difficult things will happen. Buffalo does have a problem, and it's deep and it's real."

News Staff Reporter Patrick Lakamp contributed to this article.


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