Brown’s new budget again relies on large one-shot revenues to balance the books

Mayor Byron Brown earlier this month presented his proposed 2022-2023 city budget.  It includes a five percent property tax increase and substantial increases in city spending. Approximately nine percent of the revenues ($52.6 million) come from federal stimulus funding that will be no more a year from now.

It seems appropriate to refer to something this blog reported last September after a debate during the hard-fought election for mayor:

The debate did bring out a discussion about the possibility of a property tax increase with Walton in favor of a small increase.  An increase of three percent was on the table.  Brown cited his record of cutting taxes.  He misrepresented the implications of a three percent increase in taxes, suggesting that it would amount to an extra $300 per year for property taxpayers.  A home assessed at $100,000 pays $998.50 in combined Buffalo city and school district taxes.  A three percent increase in taxes would equal $29.96.  The Buffalo News in an editorial used the same faulty math that Brown used.

Just eight months later, the truth be told.  A Buffalo News story reports that for “owners of a home assessed at $100,000, the tax increase would be about $50.”  Given some other relevant factors, it seems that the increase in property taxes next year will begin a series of regular and perhaps larger property tax increases.

Consider the following from the mayor’s budget:

  • On the revenue side, the $52.6 million in federal stimulus money revenue is certainly a highlight.  It will not be there when the 2023-2024 budget is prepared.  Fifty-two million dollars equals 35 percent of the city’s annual tax levy.
  • The new budget indicates the receipt of $34.8 million casino revenue in the current year, making up for the money that the Seneca Nation had withheld from the state and host communities over the past five years.  The new budget projects $11 million for the new year, which is about 47 percent higher than what the city received in 2018-2019.
  • The new budget reports that the city government’s share of the Erie County sales tax will be seven percent higher than two years ago and nearly 21 percent higher than what the 2021-2022 budget projected.
  • Some other revenue numbers that anticipate double digit increases over actual 2020-2021 receipts include the sale of land, buildings, and equipment – up $3.57 million (510 percent); service charges – up $2.7 million (22 percent).
  • The operating budget also draws considerable revenues from some Enterprise (quasi-independent) departments including the Water Department ($8.4 million); Solid Waste ($0.7 million); and Parking ($1.6 million).  Total amount from such funds:  $10.7 million.  That inclusion of user fees as city operating revenues allows the official property tax levy to be smaller.
  • On the spending side, the total city budget is up $33.7 million or 6.3 percent over the current budget.  Many departmental increases are in the double digits including the Mayor and Executive offices (up $1.8 million/29 percent); and the Common Council (up $412,000/14 percent).  The Police Department budget is growing by an added $5.4 million or six percent and the Fire Department’s spending will be up $5.1 million or nearly eight percent).
  • The Mayor’s Budget Message notescreation ofnew offices that will enable Buffalo to meet the challenges of the 21st century. As part of my Administration’s Recommended Budget, we will be creating a new Office of Innovation, an Office of Climate Adaptation, and expanding an Office of Diversity, Equity, and Inclusion under the direction of the City’s Chief Diversity Officer. These new offices, some of which are a consolidation of other functions spread across different City departments while others are entirely new, represent a shift in our focus so that we can strategically address the issues of digital inclusivity, global warming, and racial and economic equality in an intentional and comprehensive manner. Creating these new offices—and the positions that will go with some of them—will also enable the City to access more grant and philanthropic funding for these types of initiatives, undertake transformative projects that will help reduce long-term operational and capital costs, and make Buffalo’s economic development environment more competitive into the future.”
  • The city’s contribution to the Buffalo Public School System remains at the same amount, $70.8 million, that it has been at for several years.
  • The budget includes increased funding for new vehicles ($1.5 million) and equipment ($300,000).  Such expenses can be looked at two ways.  A good use of one-time revenues such as the federal stimulus money is cash purchases of things like replacement vehicles that will update the fleet yet do not necessarily require equivalent expenditures in subsequent years.  On the other hand, such one-time purchases might, in effect, be traded in by the Common Council in the reduction of total spending, which will allow the new budget to generate a larger surplus in the fiscal year ending next June, thus replenishing the reserve fund that went to zero in 2018.
  • City expenses for the medical insurance of retirees now represent 93 percent of the amount the city pays for medical insurance for current employees ($42.8 million versus $46 million).

The $300+ million in federal stimulus that the city has received over the past two years (some of which having been directly assigned by federal law to capital expenditures) provided the city government with some breathing room. The city had over a several year period prepared budgets that listed tens of millions of dollars in unrealistic revenues while also depleting the fund balance, setting up serious problems.  Once again, the mayor and Council are facing a situation where a huge amount of one-time revenue in the form of the federal stimulus funds will disappear, leaving a huge hole to fill at this time next year.

Over the last year or two there has been considerable discussion among a few members of the Common Council about getting the city budget to a structured position where realistic operating revenues match operating expenses and the city’s reserve fund is rebuilt.  Council Finance Committee Chairman Rasheed Wyatt has taken the lead in such conversations.

As it is sometimes said, “never let a good crisis go to waste.”  So here they are again.  Let’s see what happens this time.

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