Ink by the barrel, facts by the byte, progress by the bit — contrasting views of Buffalo’s budget

Department of Motor Vehicles Commissioner and former Buffalo Comptroller Mark J. F. Schroeder has never been a shrinking violet. Whether he was taking on a political challenge or belting out an incredible version of a classic Italian song, he’s always put his heart into it.

And that was the case last year when he, still the Comptroller, published a very strong, hard-hitting analysis of Mayor Byron Brown’s 2018-19 city budget. In a detailed review, Schroeder laid out the argument for the proposition that the city’s finances were in trouble.

Brown dismissed the analysis and suggested that Schroeder’s budget challenge was simply sour grapes for Brown’s defeat of Schroder in the 2017 Democratic primary for mayor. That loss undoubtedly stung Schroeder, but the numbers in his budget analysis were thorough and accurate.

But now there is a new city budget on the table for the year beginning July 1. The Mayor has issued a press release talking about all the great things contained therein, including level taxes. The highlight is the proposal for the city to take over the ownership and operation of 32,000 street lights.

Politics and Other Stuff, in June of last year, reviewed Schroeder’s analysis of Brown’s 2018-19 budget, and found the Comptroller’s work very credible. The Common Council, a year ago, did some minor tinkering with the budget but basically ignored all of Schroeder’s commentary. So did the Buffalo Control Board, which is supposed to be there to, well, control. The Board, also known as the Buffalo Fiscal Stability Authority (BFSA), has a budget of nearly $1,000,000 and a staff of five.

This blog took another look at the City’s finances last December to see if any progress had been made in either receiving revenues that were questionable or in reining in spending in light of the fanciful budget assumptions. Nope, nothing happening. In March, the Control Board weighed in to encourage city officials to “closely monitor” the budget.

The Buffalo News’ coverage of Mayor Brown’s proposed 2019-20 budget was pretty much a regurgitation of a press statement by the Mayor – which was interesting because the Mayor had recently described the News’ reporting, at least in terms of the Community Action Organization, as “fake news.”

Last Friday the News doubled down on the 2019-20 City budget with an editorial entitled “Brown’s City Budget Is Sound.” The commentary described the budget as “Brown’s stay-the-course plan… As the mayor pointed out in announcing the spending plan, both the residential and commercial rates are significantly lower than when he took office, a reflection of rising revenues in that period as well as sensible financial management.”

It complemented the Mayor’s decision to borrow $80 million to purchase the street lights from National Grid and to use efficient LED bulbs for the city’s street lights. They then went on: “[T]he budget plan wisely takes a more conservative approach than last year to revenue from Seneca-owned casinos, slotting in $11 million… With its rainy day reserve funds mostly depleted, city budget makers need to continue to remain conservative in their assumptions and get more aggressive in finding savings.”

By coincidence last Friday, the Investigative Post’s Geoff Kelly also had a story about the city’s budget. That report was more detailed in its analysis of the new city budget, with a headline that described the situation more accurately than the News:   Mayor Brown’s Risky Budget Assumptions.”

Kelly suggests “[T]here is little fat in Buffalo Mayor Byron Brown’s proposed 2019-2020 budget, as befits a city where, despite aspirational talk of a renaissance, population is stagnant and job growth and real wages trail national averages.

However, that word aspirational also applies to some projected revenue streams on which Brown’s budget relies. Other words and phrases come to mind, too, such as tentative, maybe, never going to happen, and zombie.”

Newly appointed Comptroller Barbara Miller-Williams has issued a report on the 2019-20 budget. Her office basically updated the numbers in Schroeder’s previous study.

Here are some of the continuing issues with the city budget, raised in Schroeder’s 2018 analysis, which the Mayor, the Common Council and the Buffalo News have mostly ignored:

  • Tribal Pact Casino Revenue. The 2018-19 budget included $17,000,000 in expected revenue, which would have accounted for two and one half years of delinquent payments. An arbitration panel has recommended the payment of the money claimed to be owed to the state, which will then distribute a portion to Buffalo, but the deal is not yet done. Brown’s new budget includes $11 million in Casino revenues for next year. Contrary to what the News suggests, that is not “a more conservative approach.” The amount is higher than the amount included in previous city budgets. In the last fiscal year when Buffalo received full payment of these revenues, 2015-16, the receipts were $7,026,041.
  • Sale of City Owned Real Estate. The current budget includes $8 million, even though the city in 2017-18 collected only $362,350. Through April 30 of the current year receipts have totaled $914,000. The new budget expects $6.9 million.
  • Traffic Violations Revenue. In 2018-19 the revenue was projected at $6 million. The city collected just over $3 million in 2017-18, and revenues through April 30 of this year have been $2.16 million. The new budget has the number at $3.3 million.
  • Entertainment Ticket Fee. This was to be a new revenue source to charge a fee to those attending five particular entertainment venues in the city. The 2019-20 budget expects $752,000. As Kelly suggests, “the entertainment ticket fee is never going to happen.”
  • Gifts and Donations. This idea emanated from Albany as a way around the limit on federal tax deductions for state and local taxes. The plan was to have people “donate” money to governments and allow such deductions to be used for federal tax purposes, with most of the donated money in fact being property tax payments. Buffalo expected $2.1 million for the year. As of April 30th $138,905 had been received. Nonetheless the 2019-20 budget includes $1,397,726 in revenues from this source.
  • Parking Tags and Fines. The current budget includes $7.9 million. As of April 30 the reported actual income was $6.1 million. $7.9 million is anticipated in the next budget year.
  • Grant Reimbursements. A total of $1,414,099 was projected for 2018-19 but only $129,287 had come in by April 30. The new budget factors the revenue at $1,117,795.
  • Overtime expenses. The actuals for 2016-17 were $29.4 million, and for 2017-18, $29.7 million. Nonetheless the 2018-19 budget provided only $16.4 million for OT. As of April 30 $18.7 million had been expended. The 2019-20 budget estimates the OT budget line at $17.36 million.
  • Judgments and Claims expenses. The line was budgeted at $2 million. In 2017-18 $6.9 million was spent, and in 2016-17 the total was $8.1 million. As of April 30 in this fiscal year $1.9 million was paid out. The 2019-20 budget number is again $2 million.

There’s an old political expression: “a million here, a million there, pretty soon you’re talking real money.”

Here are four threads to this story, and perhaps the last one is the most important: 

  1. The current 2018-19 city budget appears to be heading for a significant deficit. The damage was done a year ago when it was proposed and adopted. There are only 47 days left in the fiscal year, as of May 14. It is not salvageable. The deficit threshold in the BFSA enabling legislation for imposing hard control board status seems likely to be breeched.
  2. The proposed 2019-20 city budget is set to double down on the fiscal problems set in motion last year. Many of the false assumptions that were placed in last year’s budget document are being repeated in some modified form. While there are some minor concessions to reality, overall the improvement is just a tiny bit. The illusionary revenues make it a structurally unbalanced budget, which is another trigger for a hard control board.
  3. The Common Council seems poised to do basically nothing about these impending problems. The Control Board has been sitting on its hands.
  4. The folks who buy ink by the barrel at One News Plaza, given their circulation of daily newspapers, still control the flow of news reporting and analysis in this town. TV and radio news reporting often mimics the coverage. Superficial stories do not benefit the community. Analysis by the Investigative Post and this humble blog get into weeds of this story, but public views of public issues are influenced mostly by the printed newspaper.

This is a very serious matter, not just in Buffalo, but around the country. Newspapers have large infrastructures and payrolls that are not being sustained by shrinking advertising dollars. Pittsburgh and New Orleans residents have seen their one remaining newspaper shrink. The paper in Salt Lake City is trying to convert into a 501(c)(3) tax exempt organization to raise money through donations. News rooms around the country are being taken apart. What’s left of local newspaper reporting is heavy on things like sports coverage but very light on things that are very significant to local communities.

The lack of serious news analysis can encourage public officials to think that they can get away with things because no one is paying attention. The Investigative Post’s reporting on things like the Buffalo Billion scandal, environmental and other issues has been outstanding, and they have extended their reporting to WGRZ-TV and other avenues. But when you circulate much of your important information by the byte rather than by the ink barrel, it’s just never going to be the same as it once was. And improvements in public policy shrink to “just a bit.”

I offer no solution to this dilemma. But think about it, think very hard about it, because the vitality of a community depends upon understanding this issue.

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