The City of Buffalo’s fiscal crisis

It is the holiday season. There are decorations everywhere, likely even in Buffalo City Hall. Lots of red and green.

But I’m thinking here more about something familiar to many Western New Yorkers when they think about a crisis in municipal finance. The red and green I’m referring to is the Erie County government financial crisis brought on in 2004 when former Erie County Executive Joel Giambra presented two versions of a 2005 county budget. One would have cut spending in a draconian way – the red budget. The second was the green version, which would have balanced the budget by raising the sales tax by one percent – referred to as the “Medicaid penny.”

That process did not work out so well, and was followed by months and months of fiscal and political agony. Eventually a county control board was created to help bring order. It was not a happy time.

The City of Buffalo has for many years, following the creation of the Buffalo control board in 2003, managed its finances reasonably well, with structurally balanced budgets and annual surpluses. Those days may be over for now.

Last spring, as Mayor Byron Brown and the Common Council began preparations for the 2018-19 budget, City Comptroller Mark. J.F. Schroeder weighed in with his perspective on the budget. Schroeder raised serious red flags about the mayor’s proposal, including the following:

  • The inclusion of $17,000,000 in casino revenues that the state’s compact with the Seneca Nation committed to the City over several years
  • The sale of city owned real estate, projected to come in at $8,000,000, even though actual receipts in previous years appeared to warrant an estimate of $1,000,000
  • Revenues from traffic violations, which Schroeder suggested were $3,000,000 on the high side
  • $2,000,000 from the creation of a new entertainment ticket fee at various sport and cultural venues
  • Gifts and donations to the City in the amount of $2,000,000 from a proposal encouraged by the state that would permit some city taxpayers to avoid limitations on federal tax deductions from state and local tax collections that followed approval of 2017 federal legislation
  • Revenues from parking tags and fines that Schroeder reported may be overestimated by $1,000,000
  • Grant reimbursements potentially overestimated by $1.3 million

Schroeder also documented expenses that were substantially underestimated, including overtime expenses. The actuals for 2016-17 were $29.4 million and approximately $29 million in 2017-18. The 2018-19 budget only provides $16 million, but Schroeder suggests that OT expenses will hit $26 million by next June 30th

The response of the Common Council to Schroeder’s report was some minor tinkering on the mayor’s proposed budget. No action concerning the budget gaps has occurred since then.

The Buffalo Fiscal Stability Authority (aka, the control board) issued a report on the City’s four year financial plans in September. Buried among commentary about budget account ups and downs the BFSA report states that “there is a risk the revenue estimates are optimistic and any significant shortfall would result in the weakening of the City’s financial position. We recommend the City closely monitor the revenues during the year and modify the budget timely, as necessary.”

How’s that for hard-hitting analysis? The BFSA’s own 2018-19 budget, incidentally, totals $972,125 with a staff of five.

The city administration recently prepared its 2018-2019 First Quarter Gap Sheets Report. They say that as of the end of the first quarter of the fiscal year “the city is projecting to be at budget at year’s end for the current year ending June 30, 2019.” In fact the administration projects a minor budget surplus ($440,000) for the year.

The administration’s analysis goes on the say that “revenues are under the adopted budget currently due to a few lines, which we anticipate will accelerate.” In fact those seven revenue lines in the budget, noted above, are just a few of the hundreds of account lines in the document. They do, however, have an outsize impact on how this year is going to turn out.

The city administration offers some interesting takes on the possible revenue shortfalls. “Traffic Violations is trending lower than budget, but with the emphasis on quality of life throughout the city, there is an expectation that this will improve by 2nd quarter.” Whatever that means.

The Tribal Casino Funds are in arbitration with New York State.

The Charitable Donations program “will be announced in early 2019.”

The Facilities Maintenance Fees program is “still being negotiated with the stakeholders.”

The Fire Department’s overtime “is similar to last year,” but not to worry because there will be many more firefighters hired in January and a new union contract will soon be in place that “will reduce the amount of paid time off.”

In summary the administration reports that their “projections continue to be conservative, reflecting sound, prudent, and conservative budgeting principles.” In other words, move on, nothing to see here.

Comptroller Schroeder recently issued an update on his report based on the city administration’s Gap report. He sees little progress in addressing the budget gaps that were noted last spring. “We continue to be very concerned that actual operating revenues will come in well below the amounts budgeted, as has consistently been the case for the last three years… We have no verifiable information that any of the noted revenues will be realized at amounts greater than we projected [last spring].”

The Comptroller’s office sees overtime costs “already projecting to be approximately $10 million over budget.” They report the administration “has estimated $8.3 million of future Judgments and Claims as of June 30, 2018, but there was only available fund balance of $2.7 million in assigned fund balance to cover those claims.” There is currently $0 of unassigned fund balance. The city went through $58 million of fund balance in the past two years.

Schroeder continued:

The financial concerns identified in this report do not bode well for the long-term fiscal health of the City. Despite recent improvements to the local economy and rising property values, the City has not capitalized on this momentum to improve its own bottom line. Without a long term plan to address fiscal issues, the City will struggle to keep pace with rising labor costs and provide consistent services to residents, taxpayers, and businesses. A realistic and structurally balanced budget is a cornerstone to any long term plan to achieve and maintain fiscal health.

So where is all this heading? If in fact the budget gap for 2018-19 is as big as Schroeder is projecting, it will not be possible for the city to cut its way out of the hole; it’s too deep. Fund balance is not available. There is a “Rainy Day Fund” of approximately $38 million in city coffers, but even if raiding that account was decided, filling the gap in the operating budget with one-time revenues would provide nothing more than a short term fix to the problem.

Maybe the city can, as in days gone by, secure a big pot of new money from the state. Maybe the mayor, who has a close relationship with Governor Andrew Cuomo, can encourage the state to at least fill that large part of the revenue deficit that results from the non-payment of Casino revenues. Even that, however, might only address less than half of the full deficit.

The Buffalo Fiscal Stability Authority could come out of its dormancy and go back into a “control” mode where it could once again play a large role in the day-to-day management of the city finances.

At the end of the day, doing nothing about this imminent crisis is the one approach that city leaders cannot afford to take. It’s a “pay-me-now, or pay-me-even-more-later” scenario, and time is running out.

Civility and trust don’t come easy

Back in the days when a real Republican was President of the United States, people like Ronald Reagan and George H. W. Bush ruled the land with strength, grace and eloquence. Democrats fought Republicans over policy, but could still occasionally work together. Compromise was not a dirty word.

That seems so long ago, but as the nation honors the memory of H.W. this week there have been lots of commentaries about how it used to be. Reagan talked about a “city upon a hill.” Bush spoke of “a thousand points of lights.” They were trying to inspire the country by speaking of charity and volunteerism.

There are many things that a Democrat would challenge about Reagan’s and Bush’s legacies. Reagan had his Iran-Contra scandal. Bush beat Michael Dukakis with the racist Willie Horton ad. Reagan gave us William Rehnquist. Bush’s contribution to the Supreme Court was Clarence Thomas. Republicans cheered. Democrats attacked.

Bush’s passing, though, is perhaps best memorialized by his manner, his civility. He was a patrician and a gentleman, in the broadest meaning of the word. He respected people and played by the rules. He served his country honorably from his days as a World War II naval pilot right through his presidency. He pushed through the Americans with Disabilities Act, an extension of civil rights that will be his major domestic achievement. He worked with Canada to reduce coal omissions which created acid rain that nearly destroyed many lakes in the rust belt and in the northeast.

Bush completed Reagan’s efforts that challenged the old Soviet Union and saw the Berlin Wall come down. He fought an efficient and successful war against Iraq.

The country and the Republican Party is not the same anymore.

The Republicans are now basically a wholly owned subsidiary of the Trump organization. The Trump-Republican Party no longer believes in civility, respect for others or compromise. Smash-mouth politics and trash talking appease the base. Civil Republicans in national politics are about as rare as a unicorn.

Donald Trump and his party take pride in their in-your-face style of politics. Civil rights are being set aside by the Justice Department and the Education Department. Coal and all the danger to the environment that it creates are the fuel of choice in Trumpland. Trump is oh so cozy with Russian pal Vlad, and maybe more than that. Trump’s international forays with murderous dictators like Putin, Mohammed bin Salman and Kim Jong-un have stood America’s support for freedom and human rights on its head.

And as for H.W.’s “a thousand points of light,” here is what Trump said about earlier this year: “Thousand points of light, I never quite got that one. What the hell is it? … And it was put out by a Republican, wasn’t it.”

So as you observe the nation’s honors for George H.W. Bush and Donald Trump’s fake praise, keep in mind that Trump couldn’t hold a candle to Bush.

A matter of trust

The sex scandals that have rocked the Catholic Church have brought on a great deal of introspection among members of the Church. It has been very hard for many of the faithful to hear story after story about the sins of their priests. In many instances the issues go beyond the laws of God and extend to the laws of man.

Perhaps even more painful, we have watched as the leadership of the Church, from Rome on down to the local bishops, have covered up and protected those who have broken the laws of God and man. This is, after all, a political blog, and so it should be noted that in these Church scandals, as in political scandals, the cover-ups are often worse than the original crimes.

And so members of the Church are left to wonder, how can I believe the Church clerics and leadership? If I cannot trust them, what is left of the Church?

A program was held at Canisius College last week to discuss an initiative entitled “The Movement to Restore Trust.” Unless you caught TV or radio news stories about the event that evening or the next morning you might not know that it actually happened. The Buffalo News has not printed a paragraph about it, even on their page 3 “News Briefs.”

The program was well intentioned but it did not accomplish anything of note. The 30 second pause by the panel after a question from the audience about whether or not Buffalo Diocese Bishop Richard Malone should resign was revealing, as none of them chose to answer. A question about whether women should be ordained or whether priests should be allowed to marry was talked around for five minutes or so without any answer to the question. There was no follow-up question.

The thing is, there are 2000 years of history pointing to what exists today as the church’s leadership. From time-to-time the laity are humored by allowing them to play minor roles, but the roles are insignificant.

The laity in Buffalo or any other place is not going to restore trust in the Church. Trust is not given or restored by someone outside of the leadership, it needs to be earned by that leadership. Only the clerical leadership of the Church can earn back the trust of the faithful which has been so badly shattered. They are not even close to doing that.

A political tidbit

Final campaign financial reports following the 2018 state and local elections were due on December 3rd. I’m going to skip the details since there is not a whole lot to report. But there is a tidbit of two worth pointing out.

Politico has reported that the Democratic Assembly Campaign Committee in this year’s campaigns spent $636,000 on behalf of the successful candidate in the 146th district, Karen McMahon. That is in addition to whatever she raised and spent on her own. The Committee also spent $181,000 on Patrick Burke’s successful Assembly effort in the 142nd district. That’s an incredible amount of money on seats that, while currently occupied by Republicans, are Democratic by affiliation and should have been winnable, given strong Democratic turnout, regardless of the money that was spent. I guess they did it because they could do it. Overall it is reported that the Democrats actually had a net loss of one seat statewide. They will have to make due with their 106 to 44 seat majority.

Election law reforms coming?

Things are going to be different in Albany when the new legislative session convenes in January. The large Democratic majority in the State Senate will join the overwhelmingly Democratic Assembly and Democratic Governor Andrew Cuomo for the very rare occurrence in New York State – one party rule.

There have Republican governors from time-to-time (Dewey, Rockefeller, Wilson, Pataki). The Democrats won control of the Assembly in 1974 and the size of their majority has grown much bigger over the years.

But except for about three years (1965; 2009 and 2010) the Republicans have run the State Senate for about eighty years. It took a lot of creative gerrymandering and a couple expansions of the Senate, but they held a pretty tight grip for a long, long time.

With Democrats about to hold 40 seats of the 63 Senate seats, we are coming to a fork in the road – put up or shut up time. And as Yogi Berra used to say, when you come to a fork in the road, take it.

With divided control of the two houses of the Legislature, and with a governor who was often pleased with that arrangement, it was easy for the Assembly to pass one-house bills that would die in the Senate. Senate Democrats, while in the minority, could propose things that they knew the Republican leadership would never allow to come up for a vote. Those days are about to end.

So we’ll see how many of those going-nowhere proposals will now surface when opportunities to get approval are real and excuses for not being able to act are gone.

One of the legislative areas where there has been lots of talk and no action concerns changes – some will call them reforms – in the Election Law. New York State lags behind many other states when it comes to a voter-friendly Election Law.   Here, in no particular order, are ten potential amendments that will surface for some serious discussion:

  • Easier voter registration. You can register to vote when you apply for or renew your driver’s license – every eight years. If party organizations are on their toes they might, knowing you are not registered, bring a form to you. Otherwise, you’re on your own. Look for proposals ranging from some type of automatic registration tied to your DMV licenses to same day or near same day registrations, which are currently cut off 25 days before annual general elections.
  • Ability to change your party registration without needing to do so almost a year before the next election. That’s what the law provides now; you must change your party affiliation no later than 25 days prior to the current year’s election date in order to be able to vote in your new party’s primary the following year. What a new cut-off date might look like is anyone’s guess. This would allow some game playing for potential party-hoppers who want to have some fun in another party’s primary elections.
  • Eliminating the need for two primary elections in years when federal offices are filled. For the past several even-number years New York State has conducted two primary elections: one in June to satisfy military voting requirements for federal offices, and a second primary in September for state and local office primary elections. The split primaries increase costs and diminish interest. In days past one primary election was held in June of even-numbered years for all offices.
  • Early voting. This is a privilege that even states better known for voter suppression have made available to their voters. It could be offered for limited or extended periods of time; in multiple or limited locations; on Saturdays.
  • Voting absentee without a medical/military/out-of- town excuse. This would likely expand turnout. The counting might slow down a bit but the absentee system works.
  • Restricting or eliminating the use of limited liability corporations (LLCs) to get around campaign donation limits. The current system is out of control and gives the wealthy and influential the opportunity to feather their own nests with multiple donations to favored candidates.
  • Some sort of state financed funding for state campaigns, perhaps modeled on the New York City program. That would seem to be a hard sell, given the cost.
  • Toughen up financial reporting requirements. There have recently been several prosecutions that went after those who flouted the law concerning the raising and spending of campaign money without regard for the limits already in the law. But such prosecutions occur long after the violations occur and damage to the process has been done. Giving the state and county election boards the ability to possibly check on potential violations in real time would improve the chances of conducting fair elections.
  • Raising the threshold for automatic party qualifications based on gubernatorial votes. The present 50,000 vote requirement for the four-year creation or continuation of political parties was set decades ago when the state population was smaller. Every four years the result is that fringe parties get created, usually by major party candidates for governor looking to add more lines on the ballot with their name on it. If the threshold were 100,000 votes we would only be looking at four parties for the next four years rather than the eight which the 2018 election for governor created. Independent candidacies would still be permitted by petitioning, as is currently the case.
  • Ending fusion voting. Fusion (aka cross endorsements) gives minor parties the opportunity to wag the dog (Democrats or Republicans), influencing candidate selection, issue priorities and patronage distributions. Only two states other than New York allow this. Minor parties could still exist, but they would need to run their own affiliated candidates, something only the Green Party in New York consistently does. And as has been shown in New York State and locally, it is occasionally possible to elect people on minor party lines – think James Buckley (elected Senator on the Conservative line); Mayor John Lindsay (elected Mayor of New York on the Liberal line); Jimmy Griffin and Chuck Swanick (elected Buffalo Mayor and Erie County legislator, respectively, on the Conservative line).

All of the above proposals have been discussed for many years in New York State, but none of them have been enacted. The people who will be in charge in January have proposed and supported these ideas. So we will soon see if we should judge the state’s leadership by their talk or by their actions.

Just wondering

Speaking of the State Senate, the twenty-three Republicans who are about to become the minority in the Senate met recently and re-elected John Flanagan as their leader. Flanagan had been challenged by Western New York Senator Cathy Young, who served as Chairwoman of the Senate Finance Committee. The vote was reported to be 14 to 9 for Flanagan. The only Western New York Republican senator to vote for Young was Robert Ortt from Niagara County. Senators Michael Ranzenhofer, Pat Gallivan and Chris Jacobs, whose districts are all based in Erie County, voted for Flanagan.

Flanagan has been part of the group of powerful senators known as the Long Island Nine. Come January they will be known as the Long Island Three. Quite a comedown.

The shutout of Republicans in all statewide offices and the loss of the Senate has encouraged lots of talk about the party dumping Chairman Ed Cox in 2019. One of the names prominently mentioned as a replacement is Erie County Chairman Nick Langworthy.

So I’m just wondering: did those three Erie County-based senators who voted for someone from Long Island rather than someone from Western New York as their party leader do so to help round up future Long Island State Republican Committee votes for Langworthy when the time comes for the election for party chairman sometime in 2019? You know, for geographic balance and all that good stuff. We’ll see.

Economic development is VERY expensive

When World War II ended and America got back to the business of business – building cars instead of tanks – government units like industrial development agencies had not been created. I don’t believe that big tax incentives to lure manufacturers and other businesses from one community to another with tax incentives were very common back then either. Factories built in the early twentieth century were already in place and the workforce to operate them had returned from military service. Continue reading

As the dust settles, reviewing the 2018 elections and taking a small peek at what comes next

Poor Rick Scott. All those tens of millions of dollars of his own money, and it might not have been enough to buy a Senate seat in Florida. Maybe just $10 million more would have done the trick.

Or maybe he will wind up winning the re-count. It is Florida, after all, where they are pretty good at screwing up recounts and getting rolled by Brooks Brothers riots. The Supreme Court may be standing by to deliver another Republican victory if it gets to their desks. Continue reading

The mid-term election day edition of facts, observations and heard-on-the-streets

Today is Election Day – the mid-term of all mid-terms. This one feels a lot different. Sort of like Super Bowl Sunday, especially when your team was playing that day. Come on, you can remember how that felt.

I’m not offering any specific predictions here. After all that has been said, written and done, you can draw your own conclusions about what is about to happen. Try to be objective, because like it or not we are all about to come face-to-face with political reality. Continue reading

Collins’ seedy congressional campaign; final pre-election financial reports

Where, oh where, was Congressman Chris Collins when Steve Bannon flew into town last week to rally Trumpkins on behalf of the Congressman most likely to be in jail a year and a half from now? Bannon’s track record on congressional rescue missions for legally challenged candidates is not what you would call great, including as it does the defeat of accused pedophile Roy Moore in last year’s Alabama Senate race and the defeat of convicted felon Michael Grimm in his Republican House primary in New York City this past June. Continue reading