Schroeder’s analysis points to a return to a hard control board for Buffalo

Over many years, going back nearly 50, the finances of the City of Buffalo have had a whole lot of ups and downs. Years with major deficits, years with comfortable surpluses. Sometimes, though, years of surpluses can lull a municipal government into a sense of complacency.

In the most recent version of financial roller coastering, the Buffalo Fiscal Stability Authority, aka the Control Board, was created by the state in 2003 following budget difficulties magnified by the financial turmoil that followed the terrorist attacks on the country in 2001. The board was put in place in a “control” or “hard board” status right from the get-go, and immediately set about imposing serious budget controls on the City government as well as the Buffalo Board of Education, including a wage freeze that extended for several years.

The strong medicine worked. With the benefit of having the Control Board at their backs, the city administration, the Common Council and the Board of Education all in one form or another were able to take advantage of the wage freeze to control their budgets. Additional state aid that has often flowed to the City and to the school system over past decades also helped build surpluses and reserves.

Successive positive budgets led to improved credit ratings and the eventual change in the Control Board’s status to an advisory role. The City administration, the Council, the Comptroller and the Control Board all played a role in that success. But things have been changing.

City Comptroller Mark Schroeder early in May published a report on the mayor’s proposed $513.6 million 2018-19 budget, and the picture wasn’t pretty. The report documents a series of important budget revenues that he suggests are considerably overestimated. (Please note:  because of the size of the following table, which is taken from Schroeder’s report, and the value of including the information in order to understand the issue, the table is best viewed on a desktop, laptop, or tablet.)  The list includes:

 

Questionable Items included in the 2018-2019 Budget
 
2018-2019
Proposed Budget
 
Current FY Actual as of 4/30/2018
 
2016-2017
Actual
 
Responsible
Budgeting,  per Schroeder
 
Over
estimated
Revenue
Tribal Pact Casino Revenue
$17,000,000
$0
$3,439,330
$0
$17,000,000
Sale of City Owned Real Estate
8,000,000
240,693
1,060,836
1,000,000
7,000,000
Traffic Violations Revenue
6,000,000
2,009,690
3,993,940
3,000,000
3,000,000
Entertainment Ticket Fee
2,000,000
N/A
N/A
0
2,000,000
Gifts and Donations
2,000,000
15,933
51,097
150,000
1,850,000
Parking Tags and Fines
7,900,000
5,827,008
5,784,081
6,900,000
1,000,000
Grant Reimburse.
1,414,099
90,954
0
100,000
1,314,099
Total                                                          $33,164,099
 

 

Unassigned Fund Balance, which is used as a budget revenue item and is essentially the City’s savings account, had $41.6 million available in 2015-16. At the start of the current fiscal year only $6.5 million was left, and that, according to Schroeder, may be all gone by June 30th.

He also documents expenses that are substantially underestimated, including:

  • Overtime expenses. The actuals for 2016-17 were $29.4 million, and OT is projected for $29.8 million in the current year. The 2018-19 budget only provides $16 million.
  • Judgments and Claims expenses are budgeted at $2 million for 2018-19. The actual for the current year, through April 30th was $3.9 million, and the actual for 2016-17 was $8.1 million.

Add up all the possible overestimated revenues and underestimated expenses brings you to a total of perhaps $49 million, a number approaching 10 percent of the total annual city budget of $521 million. Assume Schroeder is only half right (I don’t think that) and you still have a budget gap of nearly $25 million. These numbers are not something that you make up by cutting office supplies and such during the fiscal year. The majority of city spending is in the personnel area, and looking to make up millions of dollars of shortfall could cost lots of people their jobs.

As a budget fanatic I reviewed Schroeder’s documentation carefully and I find it very convincing. The City budget exaggerations seem very similar to the Erie County budgets of the early 2000s, which followed the same inaccurate game plan. Those budgets led to the county’s financial meltdown in 2004 and 2005, which led to the creation of the Erie County Fiscal Stability Authority.

The City of Buffalo, of course, already has a control board in place, but it is operating in a dormant monitoring state at the moment. The state law that created the City’s control board sets out the reasons why the board can again revert to a “hard” board status. A board can take upon itself to go into control status if it determines that the city budget has crossed one or more red lines that require more than just monitoring, moving into direct control of the management of the City’s finances. One of those red lines requires structurally balanced budgets where operating expenses and operating revenues are in balance.

The budget presented by the mayor on May 1 required review and approval by the Common Council. It appears from a look at the Council’s budget actions that they just nibbled around the edges of the mayor’s plan.

The Council’s departmental amendments to the budget cut a net of $621,548 from the mayor’s proposed budget; that’s a cut of a little more than 0.01 percent. The cuts were spread over a number of departments. It wasn’t much.

The Council’s budget amendments also cut $1,000,000 from a proposed $1,500,000 appropriation for short term budget borrowing, known as a Revenue Anticipation Note (RAN). The Comptroller says that the City may need to borrow up to $100 million and he projects the interest charges at $1,000,000. The size of the note and the interest that it will cost remain to be determined, but the amount is pretty big – almost 20 percent of the City’s total annual budget. Schroeder suggests that the borrowing may have to occur in December 2018, just five months into the fiscal year. That should also be cause for alarm.

The City of Buffalo has had a pretty good ride financially for several years, but such things always come to an end at some point. The trick is, and it is a very difficult trick, to bring things in gradually for a soft landing so that recovery and rebuilding surpluses can be a planned out rather than be a panicky event.

It looks like panicky may be where things are heading. Maybe the State Comptroller should come in for a look. At the least the City Control Board needs to step up its act, because it appears that the current budget might breach the one percent of operating budget deficit that triggers a return to a hard control board; and/or, in the alternative, the 2018-19 budget could be determined to be structurally unbalanced, another trigger. The control board’s website doesn’t include an analysis of the 2018-19 city budget as yet, but perhaps that will be addressed at the Authority’s meeting on June 18th.

These things don’t cure themselves. Reality needs to be faced and a plan for filling in the gaps before things really hits the fan seems like a very good idea at this point in time.

Oh Canada!

People living in Western New York have a very unique opportunity. Some of us can, from our offices, actually see a foreign country – like Sarah Palin, only for real. We can drive in to work in the morning, take a quick glance to our right, and see another nation.

Some of us live in that foreign country for the summer. Many more of us drive over for lunch or dinner. Trips to see the Blue Jays play in Toronto or a theatre production are just a couple hours’ drive away. Or maybe it’s a trip to see a play or to have dinner in a picturesque little town a short distance across a river from a fort that that once defended America.

It is kind of neat to have this sort of situation with a foreign country, although I’ve never thought of Canada as a “foreign” country, just a neighboring area to visit, some place that we can get to in 20 or 30 minutes from home, even closer than Letchworth State Park or the Chautauqua Institute. There is more involved in getting across the border than there used to be, but it is still manageable.

But our country’s fearless leader now tells us that Canada is a “national security threat” to the United States. So what in the world does that mean? Will the border be closed? Can I still go to Niagara-on-the-Lake?

This, unfortunately, is just the latest example of life imitating art, which seems so appropriate since the president is a former made-for-TV-reality star. I’m thinking here about the 1990’s movie, Canadian Bacon. Timely and funny if you can track down a copy to watch.

The movie was not a box office hit but it had a passing interest for locals since the movie was set in Western New York and Niagara Falls, Ontario. The plot line was simple: an American president, whose popularity was waning, needed something to detract attention from his problems. Russia wasn’t interested in starting a war, so the president’s team suggested that a war with Canada would work.

As part of the agitation to drum up support for the war with Canada, the story line goes, anti-Canadian feelings are drummed up – think Donald Trump’s anti-Muslim agitation. A network newscaster, in the movie, reports “the Canadians. They walk among us. William Shatner. Michael J. Fox. Monty Hall. Mike Meyers. Alex Trebek. All of them Canadians. All of them here.”

Like in the movie, Trumpkins like Peter Navarro, Trump’s top trade adviser, contribute to the hysteria by denouncing Canadian Prime Minister Justin Trudeau, who dared to challenge Trump. “There’s a special place in hell for any foreign leader that engages in bad-faith diplomacy with President Donald J. Trump and then tries to stab him in the back on the way out the door.”

Trump’s TV economic advisor, Larry Kudlow, joined in. “POTUS is not going to let a Canadian prime minister push him around. He is not going to permit any show of weakness on the trip to negotiate with North Korea. … He really kind of stabbed us in the back … It’s a betrayal. It’s essentially double-crossing.”

President Snowflake must be served.

The movie ends with nuclear war being narrowly avoided and the American protagonists returning home victorious. Who knows how Trump’s war with Canada will end?

Facts, of course, never get in Trump’s way, so he lied about the United States’ balance of trade with Canada. We actually have a positive balance of trade with them.

Trump, of course, is the master of deception. Anything that distracts attention from the corruption of the administration is worth it to him, no matter how much damage his actions produce.

Through it all the Republican faithful, elected officials and party leaders have been looking the other way, so much that their necks must be permanently twisted. Where is the criticism, where is the outrage about a president and his appointees operating as if they are above the law? Why are people standing by and enabling this morally and ethically challenged president when he attacks our friends while cozying up to communist thugs?

While the attacks on American allies go on unabated by Trump and his minions, we this week have a new episode in the Trump Show starring Trump as president and North Korean murderer Kim Jong Un as the ring master. Kim has already won the meeting by bringing an American president to him. Tweedledum and Twiddledee are not going to bring peace to the world, however, no matter how much they spin their conversation.

All the while, with the war on Canada and Europe and the fraternization with North Korea, Vladimir Putin is undoubtedly sitting back and enjoying the show. He must be so proud of Donald.

Actually, rather than watching that comedy, Canadian Bacon, you might want to find a copy of a different and perhaps more appropriate movie to watch, The Manchurian Candidate. It’s aboot political intrigue, eh?

Sully and Bucky and Roseanne

If a tree falls in a forest, does it make a sound?

The Buffalo News recently began another round of cutbacks in staff, and this time, in its product. Since this a sensitive subject the News management is pretending that that fallen tree didn’t make much of a sound. But it did.

The sound was a bit muffled. Some coverage has been pieced together by Business First, The Public and the electronic media. Politics and Other Stuff noted the planned cutbacks. Elmer Ploetz’s article in The Public (he’s a former News reporter) is particularly insightful. But none of the articles have told a complete story.

And as so often is true, the backstory is more interesting and informative than the original one.

Ploetz notes the tweet from the now former sports columnist for the News, Jerry Sullivan:

I accepted a buyout today after the News took away my column.  They felt my voice  was becoming bad for business.  It’s been a privilege to cover Buffalo sports for 29 years.  I wrote for the readers, who deserved a fair, objective and passionate perspective, even when it stung.

Bucky Gleason, another News sports columnist, is also gone. His comments on Twitter were not as direct as Sullivan’s:

Whether you agreed with my opinions or not over the years, I always understood and embraced the fact that people cared. I must say, for a Buffalo kid who started with taking bowling scores to becoming a columnist at his hometown paper is a pretty cool story.

Like most Buffalo sports fans I have a lot of opinions about the teams, the players, the leagues, and the ownership. I’ve watched the depressing stories about the Bills and Sabres over the past couple decades, shaking my head about how badly they were led and performed.

Like most sports fans in Buffalo I looked on the day after the game (or more recently, the hour after the game, online) for an interpretation of what I saw. I rarely read the actual stories about the game; I just saw it myself. I want some analysis.

Sullivan and Gleason certainly offered that, as did Larry Felser in days gone by. I never agreed with everything they wrote, but most people who read columns of any sort, political, business, or in the sports world, read them to get a perspective on things and do a little chewing on it.

Ploetz’s article hints about the possible backstory about the terminations in the News’s sports department:

So why would the News push two of their most recognizable assets out the door? …Either the leadership at 1 News Plaza really is that stupid.  Or perhaps pressure was coming from someplace like One Buffalo, where they seem to be a bit twitchy about criticism. And if the News, which has been making an increasing amount of its income from printing, was to pick up, say, printing of Buffalo Sabres game programs or Buffalo Bills materials…well, that would be good for business, right?

The observation is interesting. But then if you are a News subscriber who looks at the sports section, think about this too. In recent weeks the newspaper has gone out of its way to do an extensive series of stories about the Bills’ first round draft choice, quarterback Josh Allen. The puff pieces appeared (I didn’t read past the first paragraph or two) to be designed to promote excitement about the kid. I hope he is the second coming of Jim Kelly, but nobody knows whether or not that will come true. Excitement about the draft choice might, of course, sell tickets at New Era Field.

And there was a second series of puff pieces about Pegula Sports and Entertainment co-owner, Kim Pegula, telling readers about all the wonderful things that she is doing. And, oh, by the way, what can we do about the football stadium, and the hockey arena which is old and falling apart?

And then Sully and Bucky, who have often criticized the Bills and the Sabres, were shown the door.

This all to some might seem like collusion, but alas, there is no local Robert Mueller available to look into that. It was the sort of thing that once happened in Buffalo, back when we were a competitive two newspaper city.

Roseanne

I was never much interested in the original Roseanne Barr television show when it ran in the 90’s. But with the high volume of attention the second coming of the show attracted with its potential Trumpified political slant, I decided to take a look. Heck, I occasionally watch a little Fox News to see how things are being presented there.

The fact is that the new Roseanne show was about more than Trump. In fact in its short life, the series made good notes about all the struggles that many American families endure as they try to balance their budgets while also trying to maintain their health with adequate medical coverage.

An episode or two highlighted things like splitting pills to make prescriptions last longer, or deferring needed knee surgery because deductibles and co-pays are very high. That isn’t comedic, but it is reality, the kind of reality that millions of Americans deal with every day.

The irony, of course, is that the TV show that burst on the scene as a celebration of Trump in fact highlighted the damage that Trump and company have done to the health care of millions of Americans. The Republicans were not successful in repealing Obamacare, but its replacement, Trumpcare, has, by regulations, promoted things like the high deductible, high co-pay insurance plans that are the next best things to not having medical insurance at all. It is probably the type of insurance that Dan and Roseanne Conner had.

So goodbye to Roseanne and all her racist twittering. You cost a hundred people their jobs and shot down a good demonstration of how Trumpcare is hurting people. Don’t let the screen door hit you on your way out.