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Buffalo Grows Cash Surplus

Buffalo’s surplus of cash continued to grow for the sixth year, but the city’s fiscal watchdog warned that the state’s budget crisis has clouded the upbeat news.

The city has amassed $48.2 million that is free and clear of any fiscal obligations. In addition, there is another $33.6 million set aside in a “rainy day” fund for emergencies.

In all, the city has nearly $82 million in undesignated reserves and emergency funds. Still, this is no time to abandon what he described as “conservative” budgeting by Mayor Byron W. Brown and the Common Council, Comptroller Andrew A. SanFilippo said. “We have just posted another record-breaking fund balance for the city,” he said. “At the same time, there are serious storm clouds on the horizon.”

While the city added $5.3 million to last year’s record fund balance, the $138.6 million balance is offset by nearly $57 million in anticipated costs, including pending court cases.

Then the state’s multibillion-dollar budget shortfalls will likely trigger cuts in aid. The city is already aware of at least $2.8 million in expected reductions, and officials are bracing for even more pain.

City pension costs are also expected to balloon by 27 percent, or $6.4 million.

“Because of these factors, we’re not jumping up and down over [the surplus],” said Deputy Comptroller Darby R. Fishkin.

When one takes into consideration that the city’s four-year fiscal plan calls for using $28.3 million in surpluses to balance the 2012 and 2013 budgets, San-Filippo said Buffalo’s fiscal cushion could shrink dramatically.

“We could easily deplete our [reserves] in the next several years and have to start using the rainy day fund,” he said.

Last fiscal year, Buffalo received a $15.2 million increase in state aid, said city accountant Anne Forti-Sciarrino. Without it, the city’s fund balance would have likely decreased from the previous year.

The city’s $48.2 million free-and-clear reserves have actually gone down in the past couple of years. One key factor involves the city’s decision in 2008 to channel millions of dollars into the rainy day fund, the account that can only be used for “extraordinary needs.” Put simply, city leaders can’t dip into the fund to pay for routine expenses. This year, the city added $3.5 million to the fund.

SanFilippo said the figures do not include $22 million in unspent state aid that the control board is holding on behalf of the city.

Despite the comptroller’s cautionary tone, Buffalo has faced ongoing criticism from union leaders and others over its growing surpluses. City officials acknowledged that there can be a fine line between perceptions that government is being managed prudently and that the city is building reserves on the backs of taxpayers and workers.

SanFilippo disclosed that he is reviewing one plan that could bring future tax relief. The strategy would set aside an unspecified amount of money for neighborhood improvements, paying for capital projects up front, as opposed to selling bonds and incurring long-term debt.

“This alternative could give taxpayers a break and improve quality of life,” said SanFilippo.

Earlier this year, a citizens advisory panel that helps city officials craft capital budgets each year said the funding earmarked to repair streets, improve parks and make other community improvements is “woefully insufficient.” The Citizens Planning Council urged SanFilippo to raise the debt ceiling in the coming year so more projects can be funded.

The comptroller said a pay-as-you-go approach for some capital projects might be a prudent way to address the concerns.

SanFilippo was scheduled to announce the year-end fiscal results at a City Hall news conference today. Officials at the state control board that has overseen city finances since 2003 are expected to review the figures and comment on them at a Feb. 10 meeting.

The comptroller conceded that actions taken by the control board have helped improve the city’s bottom line. The Buffalo Fiscal Stability Authority had imposed previous wage and hiring freezes.

Nevertheless, SanFilippo reaffirmed his belief that it’s time for the city to be allowed to “chart its own fiscal course” by having the control board morph into an advisory-only capacity.