Sometimes major problems for governments come at them out of nowhere like a punch in the gut. Pearl Harbor; 9/11; COVID. Recovery is hard and speed is of the essence.
Then there are problems that grow even though they don’t look menacing and unmanageable. Such matters are often handled tentatively or not at all. The towns of Amherst, Cheektowaga, and the City of Buffalo come to mind.
Part of the explanation for why property taxes in Amherst are 11 percent higher in 2024 appears to be a lack of serious long-term planning. For many years taxes were not increased and everything seemed good. If there was some long-range planning about how level taxes might lead to a big increase down the road, it wasn’t anything generally known to town residents. The full governmental and political consequences of the jump In taxes this year, along with the recently announced property reassessments, remains to be seen.
Geoff Kelly in his recent Investigative Post newsletter explained the fiscal dilemma that the new Cheektowaga Supervisor Brian Nowak is facing. “Nowak noted that the town’s expenses have risen 10.3 percent over the last four years. In that same period, the town’s tax levy has risen less than 1 percent. That imbalance has drained $5.4 million from the town’s cash reserves, according to Nowak.”
The City of Buffalo has a long history of fiscal crises. A memento of my work on the State Assembly staff is a copy of a bill enacted in 1979, with bi-partisan support, which made “an appropriation for the purpose of providing emergency state assistance to eligible municipalities,” which included the City of Buffalo. Fiscal meltdowns big and small have come up periodically in the past forty-five years.
In 2003 the state created the Buffalo Fiscal Stability Authority (BFSA), aka the Control Board, to oversee and supervise the city’s finances. The BFSA was created as a “hard board” with the ability to manage budgets, spending, contracts and other aspects of the city’s operations. The hard control period led to more stable finances. Surpluses were attained. Four-year budget plans were mandated and meaningful. It was tough love but it worked.
In 2012 the BFSA, satisfied that order had been restored, morphed into a “soft” board that would monitor revenues, expenditures, and borrowings while direct control of those operations returned to the mayor and city Council. Things changed.
Property taxes and fees over the past twelve years were rarely increased. Surpluses were totally drained. The fiscal cliff was coming into focus again. A post on this blog (The next mayor of Buffalo will have giant budget holes to fill; a hard control board is needed | Politics and Other Stuff (politicsandstuff.com) suggested that the crisis was at hand and that the control board would once again be required to assert its option to manage the city’s finances.
With the tragedies of COVID, however, came manna from heaven. Okay, it was actually more than $330 million in American Rescue Plan funding from the federal government.
Federal relief legislation allowed municipalities including Buffalo to use a portion of the funding to replace tax and fee revenues that were lost due to the disruption and closing of businesses, which reduced revenues from the sales tax, parking revenues, and other fees. In some cases homeowners and businesses were not able to pay their property taxes and user fees for water and public sanitation services.
While there might be some small lingering effects from the loss of municipal revenues related to COVID, the recovery began in 2021 and has proceeded since then. The City of Buffalo, however, continues to use the pandemic relief money to fill budget gaps. More than half of the $330 million in COVID relief funding has gone for that purpose. There has been some controversy about that, since many social service and other non-profit agencies had been anticipating a larger chunk of the federal money based on earlier city government indications.
Preparations for the city’s 2024-2025 budget are underway and Mayor Byron Brown has been setting the stage for what is coming. He has suggested that taxes might need to be increased for snow removal since Buffalo has to be prepared for storms. The city needs to fund the increased costs for its new contract with the police union. It also has a massive obligation to fund a $43 million settlement over a five-year period related to a tragic accident involving a police cruiser. Those three big-ticket items loom large over the city’s finances along with the other necessary expenses of running city government.
The BFSA legislation mandated the annual preparation and updating of a four-year plan for the city’s expenses, receipts, and borrowings. The city administration has complied with that requirement. BFSA reports have highlighted major spending and revenue items in those four-year plans that have been speculative. Good to report that, as far as it goes, but it does not go far enough.
A recent story in the Buffalo News highlighted some back-and-forth between the BFSA and the city administration about whether the city is or should be conducting a hiring freeze or simply controlling vacancies. It seems like a friendly chat about how things are going but the participants did not seem to link that discussion to that cliff on the horizon.
The BFSA over the past several years has operated very tentatively. They obviously know that the pandemic funding is running out, surpluses are gone, and big problems are now on the table. The city administration and Council have been dancing around all of that. It’s time for the Control Board to lay the law down.
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