Buffalo's fiscal watchdog says the city needs to get out of its longtime habit of taking money from reserves to close out budget deficits. Comptroller Mark Schroeder warns that continuing that habit, along with rising conditions elsewhere, could put Buffalo on a path toward a new financial crisis.
Schroeder on Tuesday afternoon reported the city used $34.5 million from an unassigned reserve pool to close a deficit for fiscal year 2016-2017, which ended June 30. That leaves just $6.5 million in that fund source, which the comptroller said is the only pool from which the city is allowed to take money for closing budget gaps.
"For too long the city has relied on its reserves to compensate for structurally imbalanced budgets," Schroeder said. "With those reserves dwindling, the city will soon no longer be able to dip into its savings to fill the holes in its budgets."
Common Council Member Richard Fontana conceded that perhaps the city is indeed relying too often on its fund balance to solve budgetary shortcomings.
"We're going to need to look at different issues that are affecting the budget negatively," he said. "One is the user fee is running a $5.7 million deficit every year, roughly, $3.2 (million) for sure but then we dip in and take out extra money at the end of the year to reconcile the books."
Expenses that went over budget included police and fire expenses, primarily overtime costs, to the tune of $5.2 million dollars. Prior year claims were over budget by an estimated one million dollars, while transfers to the city's Solid Waste Fund were over budget by about $440,000. There were also revenues that were under budget in fiscal 2016-2017, including more than $7 million in land sales.
Kevin Helfer, the city's Commissioner of the Parking Enforcement Division, also co-chairs Mayor Byron Brown's fiscal sub-cabinet. He agreed the city is behind in its real estate revenues but he wouldn't go so far as to say the city is "down." Rather, he suggests those funds are simply delayed.
"Whenever you sell land, it's like selling your house. You get a closing date and nobody ever closes on time," Helfer said. "It takes a month or two months later. That's exactly what's happening to us here."
Another revenue shortfall comes from Seneca Casino Compact payments that never arrived. The Senecas, earlier this year, declared they have fulfilled their financial obligations set forth in the compact and have stopped payments. The state disputes the Seneca claim but it has not been resolved to Albany's satisfaction.
The city estimates its casino compact-related revenue shortfall at $3.36 million. Helfer expressed confidence that Buffalo will again see payments arriving pending arbitration.
Schroeder, meanwhile, warned that other emerging conditions may create even more strain on Buffalo's finances: an estimated $4.4 billion state budget deficit, decreased tax collections and federal tax reform. The comptroller said he'd leave it to federal lawmakers to explain the latter's impact on residents but he did not have warm feelings for its potential impact on public finances.
"I'm here to tell you, as the Comptroller of the City of Buffalo, it has an effect not good with the City of Buffalo," Schroeder stated.
