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Brown to propose reforms in budget

Mayor Byron W. Brown will unveil sweeping fiscal reforms next week that aim to prevent budget crises as city officials anticipate a time when a hard control board no longer calls the shots.

One change would require the city to set aside tens of millions of dollars in a "rainy day fund" to deal with unexpected expenses. The control board repeatedly has stressed the importance of building such reserves.

Another change would involve enacting a city law requiring four-year plans, not just annual budgets that give short-term fiscal snapshots.

The state law that created the control board forces the city to prepare four-year plans, and Finance Commissioner Janet Penksa says the city should be required to continue the practice once the oversight period ends.

Brown will detail the reforms when he unveils his new budget Tuesday. The changes would require Common Council approval.

Both safeguards would help the city to anticipate and ease fiscal pressures before they reach crisis levels, Brown said.

The reforms also would send a positive signal to Wall Street, Brown said, expressing hope for another upgrade in the city's credit rating.

City Comptroller Andrew A. SanFilippo said he was "fully supportive" of the proposals. "These two changes will emphasize our commitment to fiscal budgetary restraint," he said.

Buffalo already has a policy restricting the city's annual long-term borrowings. Officials call it a "debt diet."

But no laws require it to set aside specific reserves for unforeseen setbacks. Under Brown's plan, the city's reserves would have to equal 12.3 percent of its budget -- about what it spends every 1 1/2 months on day-to-day expenses.

If the law were in effect right now, Buffalo would have to hold nearly $40 million in the reserve fund.

Penksa said government finance experts encourage municipalities to set aside the equivalent of one to two months of expenditures.

Buffalo would currently have no problems funding such a reserve. The city's total fund balance grew by $16.9 million last year and now totals $56.1 million.

If the Council approves the plan, strict guidelines would govern how the fund could be used. Only 25 percent could be spent in any year, and it would have to be paid back.

e-mail: bmeyer@buffnews.com

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