The City of Buffalo is just over a month into the new fiscal year. Already there is some not totally unexpected bad news coming from City Hall.
Geoff Kelly of Investigative Post reported last week on overtime spending for the Police Department (https://www.investigativepost.org/2025/08/06/police-overtime-in-july-unabated/). The article noted that July PD overtime exceeded what was spent in July 2024. Several months ago acting Mayor Chris Scanlon’s administration said that they were taking steps to bring down the use of overtime.
Despite the city having spent $39.6 million in 2023-2024 and likely $40 million or more for overtime last year, the 2025-2026 budget proposed by acting Mayor Scanlon and approved by the Common Council provided only $24.6 million for the new fiscal year. That inaccurate account meant that the city would start the new fiscal year with a big budget hole of about $15 million.
The adopted budget included several likely additional budget holes for the coming year. Here is a list of some things that will present problems:
- The hotel bed tax that the state Legislature authorized the city to enact is not in place yet. The administration projected $3.4 million in annual revenues from that source. If the tax is not put in place until October that will mean that one-quarter of the budget year collection opportunity will have passed. If the estimated tax collection is accurate that would amount to $850,000 in lost revenues.
- The budget includes a variety of fee and penalty charge increases that are problematic. The increases may not be supportable based in the volume of people and businesses that would be subject to the changes.
- Revenues anticipated from the Seneca Buffalo Creek Casino are budgeted at $11 million. The new compact between the Seneca Nation and the state is still under consideration.
- Budgeted amounts for employee benefits, including medical insurance for current and retired employees, are an issue. The Buffalo Fiscal Stability Authority notes: “Health insurance in total has increased on average 7.5% over in the past 3 years. The budget increases 4.8% in 2025-26… Health insurance is likely underestimated over the Financial Plan.” If actual medical insurance spending in the new year increases by 7.5 percent rather than 4.8 percent then total spending would increase by $2.7 million over budget, creating another hole.
- Five city union contracts expired at the end of June. The new budget includes only $2 million for potential settlements. Total salary costs are about $210 million per year; $2 million is less than one percent of that.
Then there is the matter of creating the state-authorized Parking Authority. Scanlon plans to appoint the members of the Authority as soon as September. That is the least of the process. A staff will need to be hired along with bond counsel, attorneys and consultants to estimate the value of the facilities. That will cost many hundreds of thousands of dollars but no source of funds to pay for the set-up expenses has been identified. If for whatever reason the Parking Authority arrangements are not moved along expeditiously or do not produce $42.6 million in revenues that will create problems.
The acting mayor has suggested that if deficits occur because of delays or inaction on the Authority set-up or the bed tax revenue, then $30 million in deficit bonds could be sold and reductions in all departmental spending would be implemented.
Finch Ratings recently downgraded the city’s bond rating from A+ stable to A+ negative, citing the depletion of reserves, problematic revenues and expenditures in the city budget, and the city’s heavy reliance on federal relief funds that are no longer available.
I have though for a long time that rating agencies’ reviews of municipal finances are always a day late and a dollar short. In Buffalo’s current situation they are years late and tens of millions short.
The way that municipal budgets are supposed to operate is that a balanced budget begins the year; revenues and expenses are monitored and adjusted during the year; and the end of the year brings a small surplus. That is totally different from how the City of Buffalo has operated. Setting the system straight is going to take a lot of hard work for the incoming administration.
The fight over the capital budget
While the city’s operating budget is flying under the radar at the moment, a major fight has broken out among the mayor, city comptroller, and the Board of Education about the city’s capital budget concerning the amount of city bonds that should be issued for a variety of city and school projects. The mayor in December proposed a bond sale of $110 million. Comptroller Barbara Miller-Williams insists that the city can only afford a sale of $28 million. She has asked the mayor and the Board of Education to submit their lists of priority projects that can be borrowed under her borrowing cap.
The city’s capital budget is proposed by the mayor and is usually passed by the Common Council with few if any changes. The Comptroller now insists that she has a duty to pare the amount down to a more affordable amount. The mayor and Board insist that a large portion of their proposed borrowing is for projects that attract state and federal reimbursement.
The result of the back and forth has been that no bonds have been sold thus far and therefore no work on the proposed projects has begun. Some of the projects are tied to federal and state aid. The comptroller announced that she will sell bond anticipation notes for about $7 million in projects that are in part federally funded.
In the case of the Board of Education projects, the originally proposed amount was $55 million, later reduced to $22 million. School capital projects are usually funded by the state at up to 97 percent of costs. So while city bonds are the vehicle for moving things along the actual capital expenses cost the Board or city a relatively small amount of money.
At the moment the city’s capital budget is going nowhere.
Bluesky @kenkruly
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