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The City of Buffalo is not currently financially sustainable. Taxpayers could foot the bill.

 Buffalo City Hall is photographed from a low angle. It is an art-deco building made of beige stone. Small windows uniformly line the building. Fluffy white clouds and a peek of blue sky form the backdrop.
Mason Ald
The city’s comptroller’s office says a projected extra $23 million that was not budgeted for will flow out of city coffers between now and the end of the fiscal year.

Talk of potential tax hikes and service cuts is swirling in city hall.

That’s because the City of Buffalo is not currently financially sustainable - the money going out is more than the money coming in according to the city comptroller’s latest cashflow report.

The general consensus seems to be that unless something significant changes between now and the next fiscal year starting July 1, residents will likely foot the bill.

Finance Committee Chair and Fillmore District Councilmember Mitch Nowakowski says the city is "structurally deficient" in its finances, and though there are a multitude of ways to generate revenue, he believes the city should seek the "most responsible" method - asking for more cash from the state.

"I believe that an increase in AIM funding right now is the most responsible," Nowakowski said.

AIM stands for Aid and Incentives for Municipalities funding and is designed in part to support financially challenged local governments. But that funding has been frozen since 2012. Buffalo Mayor Byron Brown joined other municipal leaders in mid-March to call on New York State Governor Kathy Hochul for an increase in state AIM. Without it, according to Brown, a tax hike is more likely.

"This isn't for pet projects. This is for the essential needs of our communities all across the state of New York. If AIM levels remain frozen, as they have been for the last 12 years, it will result in inequities that will hurt our economically vulnerable and middle-income residents," Brown said.

Buffalo's Common Council unanimously voted to support Brown's request in a meeting held March 19. The legislators also took steps to keep the projected budget deficit from getting any bigger between now and the end of the fiscal year by adopting a resolution that basically amounts to a city hiring freeze for non-safety and non-frontline positions.

But the city’s financial state should have been addressed much sooner according to the council’s longest serving member, David Rivera of the Niagara District.

"We've had conversations now for years about the city's financial conditions and the projections going into the future," Rivera said. "We've heard from the control board, we've heard from the comptroller's office, we've heard from the Board of Education, we've heard from our own staff, our own analysis, that not much has been done to change the structural problems of our budget."

"We should have been doing this gradually over years. And now the only way around this is to increase fees and taxes because we failed to do it gradually over years," he added.

University District Councilmember Rasheed Wyatt echoed those sentiments: "We know at the end of this year there’s going to be a reckoning, and there was things that we should have been doing all along that we didn’t do and we have no one to blame but ourselves," Wyatt said.

According to Gregg Szymanski of the city comptroller's office, a projected extra $23 million will flow out of the city's coffers between now and the end of the fiscal year which was not previously budgeted for.

Of that total, Szymanski estimates a projected $5.5 million will pay for snow removal contractors who worked in January this year. An estimated $800,000 each month will cover police pay raises in accordance with the new police union contract. That contract has a retroactive start date, and runs from July 2021 through June 2025 which means an estimated $13 million will be spent in March or April this year to cover the retroactive police pay increases, according to Szymanski.

Nowakowski says that the extra expenditures were unavoidable.

"I heard that this was the best year [for snow removal]. I'm happy for that number one, but guess what? That costs money. And you have to find money in a budget to be able to cover that and revenues to be able to cover that," he said. "The second was the police contract. That is what municipalities do. You have to settle police contracts - these are union members, you can't avoid it."

In his 16 years as mayor, Brown has not raised city taxes, but even "miniscule" incremental tax increases over the years could have helped avoid the city's current fiscal projections according to Nowakowski.

"The fact of the matter is, when you don't raise revenue for 16 years you're going to come to a standstill where your revenues don't match your expenses," Nowakowski said.

The city has recently relied on federal funding to plug budget gaps. In 2021 Buffalo received $331 million as part of the American Rescue Plan Act - federal dollars dispersed to municipalities to support the recovery from the COVID-19 pandemic. The city elected to use almost $160 million of that cash to replace lost revenue according to the Department of the Treasury. The rest must be obligated to recipients by the end of 2024.

We’ll find out if an increase in state AIM funding is headed to Buffalo when the New York State budget is announced, now due April 4th.

Corrected: April 5, 2024 at 5:45 PM EDT
A previous version of this story stated that the city of Buffalo had elected to use close to $60 million of American Rescue Plan funds to replace revenue. The correct figure is close to $160 million.
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