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STRAIGHT TALK <br> REALITY HAS SET IN FOR THE CITY, BUT IT HASN'T FULLY SWEPT CITY HALL

The Buffalo Control Board's scathing criticism of city and school management here was more refreshing than it was surprising. In fact, the problem may be worse than Thomas Baker, the chairman of the Buffalo Fiscal Stability Authority, made it out to be. The real problem isn't that tough management decisions aren't made, it's that they are so seldom even considered.

Welcome to the land of deeply entrenched interests, ossified practices and loyalty to the status quo.

To be fair, there has been some progress. Crafting a cost-saving parks transfer to Erie County was both difficult and important, and the school system now has an able chief financial officer. Hundreds of jobs have been cut, and one-officer police cars were instituted. Backed by the clout of a control board that earlier froze wages and hiring, the city also has saved money by shifting employees to a single health insurer.

But those gains, important as they are, are too small to save a city that has too little tax base to pay for the services it provides. That has been true for years. What has changed is that the state now has said it won't provide the annual financial bailouts Buffalo relied on to stay solvent as its residential and commercial tax base declined over the past three decades.

With its tax rate near the constitutional limit, the city simply can't tax the survivors much more than it does. Borrowing will continue through at least 2006, and the plan to end it then depends on a highly speculative $7 million contribution from the county sales tax. In light of those exigencies, the control board has brought needed fiscal discipline to institutions that have exhibited too little of that quality in the past.

At the heart of Buffalo's crisis is a simple truth: The city still spends more than it gets. Without a state contribution, it will slide deeper into an insolvency that can't, legally, be stopped by declaring bankruptcy.

Buffalo's labor contracts, fueled by politicians' lust for union support and the state's willingness to provide fiscal handouts, are too costly for city taxpayers. But the state laws that ban strikes by government workers also make it virtually impossible to gain efficiencies through negotiations.

State aid and state labor laws are precisely the pegs on which most of the city's unions hang their obstinacy. To an entrenched mind-set that believes the state will always be there to save the city from its problems, there is little incentive for reform. For example, the drowning Yonkers school system just got a lifesaving state commitment of $6.1 million in education aid advances and outright grants, even during the state's own fiscal crisis.

And in the current climate of low inflation, municipal unions reasonably see little chance of wage gains from contract talks and great risk for their workers and retirees in the possibility of givebacks in health insurance and other benefits -- the main cause of escalating city and school personnel costs despite the trimming of hundreds of jobs. So why come to the table and restructure?

Well, because the city dies if that doesn't happen. Buffalo can't cut its way to spending stability without cannibalizing its services to the point of urban pointlessness, of abandoning the concept of a city. It needs structural changes far more drastic than the steps so far taken.

Meanwhile, our state legislators need to stop mouthing platitudes and start actively pushing for a reduction in unfunded mandates and costly regulations that make a financial comeback by Buffalo virtually impossible.

That said, local leadership still needs to lead. But that's not happening. In fact, it denies there is a problem. Yet a reluctant School Board had to be coaxed into accepting a generous offer of private dollars to help find and pay a stellar school superintendent, the Fire Department has gone nearly a year without a new commissioner, top police management officials apparently feel so secure in their non-union jobs that they can sue the city for pay raises and the city comptroller wastes taxpayer money on a redundant audit of the control board.

Former Buffalo newspaper editor Mark Twain had it right: Denial is not just a river in Egypt. More than 130 years later in Buffalo, denial still flows.