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Home > Leadership > City Comptroller > Press Releases > Schroeder Releases Response to City Budget

Schroeder Releases Response to City Budget

Commends Mayor for improved bond rating, but warns against depletion of fund balance, parking fund “sweep,” and solid waste fund deficit

Click here to view the Comptroller's Budget Response

May 11, 2012 - In a report required by the city charter, Buffalo Comptroller Mark J.F. Schroeder warned against the depletion of fund balance, as well as the transfer of surpluses from the parking fund into the general fund, where it is used to subsidize the money-losing solid waste fund.

“The mayor should be commended for the sound fiscal management that has led to our improved bond ratings, especially when municipalities across the state are running deficits and having their bond ratings downgraded,” said Schroeder, who pointed out that Buffalo is in the “A” category with all of the “Big Three” bond rating agencies, Moody’s, Fitch, and Standard & Poor’s.

“However, we can’t keep using fund balance to plug the gap between revenues and expenditures,” said Schroeder, pointing out that the fund balance has been tapped an average of $12 million in each of the past three years. “The bond rating agencies have warned against this becoming a trend.”

Schroeder said that the city still has a healthy fund balance at $130 million, but the only portion of it that can be used to fill budget gaps – the unassigned fund – is dwindling.

“Our estimates have the unassigned fund running out of money this year,” said Schroeder.  “The remainder of the fund balance, including the ‘rainy day fund,’ cannot be used to balance the budget.”

Schroeder said he is also concerned about surpluses in the parking fund – $3.2 million in each of the past two years and $5.2 million budgeted for this coming year – being transferred into the general fund.  The general fund, in turn, is used to subsidize the yearly deficit in the solid waste fund, which is $3.2 million this coming year.  It will be the seventh consecutive annual deficit in the solid waste fund, which already has an accumulated deficit of $20.3 million.

“In the state Capitol, we called this type of transfer a ‘sweep’ – using surpluses in one operation to offset deficits in another,” said Schroeder, a former assemblyman.  “That surplus from the parking fund should be used to build new parking ramps.  Instead, we will be borrowing money to build new ramps.”

Schroeder also included in the report the Buffalo Fiscal Integrity Act, legislation he unveiled last week designed to ensure the financial health of the city for years to come.  If enacted, the amendment to the city charter would require annual four-year financial plans, as well as establish policies to protect the city’s fund balance.