Scanlon’s approach to balancing Buffalo’s books

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Acting Mayor Chris Scanlon at a recent rally in front of City Hall. Photo by I’Jaz Ja’ciel

Editor’s note: This is the second of three stories on Buffalo’s acting mayor, Chris Scanlon. Today we report on his approach to dealing with the city’s fiscal problems. Monday’s story was a political profile. Wednesday, we report on the dilemma Scanlon faces with the police and fire departments.

Nothing looms larger over Acting Mayor Chris Scanlon’s administration than the city’s precarious finances.

The current year’s budget is balanced on paper with more than $40 million in one-shot revenues, as well as millions more in fees, fines and other income the city’s comptroller and state-imposed financial control board have warned may not materialize. 

The control board estimated over the next four years the gap between city revenues and expenses could approach $150 million.

Scanlon’s acting finance commissioner last month announced the current year’s spending plan was already nearly $18 million in the red after just one quarter, largely because the outgoing Brown administration tapped the city’s savings account to plug a hole in last year’s budget. The current year’s budget that began in July had relied on those savings to make ends meet.

The last of the federal pandemic relief money that has been keeping the city afloat for the last three years will cover that shortfall, at the expense of community groups who felt they’d been promised funding. Ballooning overtime and pending lawsuits threaten to blow new holes in the city’s spending plan between now and June 30, when the financial year ends.

The city is broke and Scanlon knows he’s got little time to find solutions to stave off a fiscal collapse. He must submit next year’s budget to the Common Council in April and there will be no federal pandemic money and no reserve funds to make up the chronic imbalance between revenues and costs.

“You’re looking at a budget hole of tens of millions of dollars — tens of millions,” Scanlon told Investigative Post during an hourlong interview last month.

“You can’t tax your way out of it. You can’t cut your way out of it. It’s got to be a combination of both sides of the equation,” he said.

Scanlon said he intended to put an end to the previous administration’s habit of underfunding expenses and overestimating revenues. And he vowed he would not seek a bailout from the county, state or federal governments until he’d put “our house in order.”

“I think you’ll see things treated with a sense of urgency coming out of this office, not letting things linger,” he said.

Cutting expenses

The city’s financial problems are not news to Scanlon. As a member of the Common Council’s leadership team for 10 years, he’s been a participant in the city’s descent into the fiscal quagmire. Indeed, he’s joined his fellow legislators in approving budgets that led the city into the swamp.

But Scanlon believes the powers he exercises as acting mayor enable him to put the city on firmer financial ground.

“There’s only so much one legislator can get done when it comes to effectuating change inside of this building,” he said. “I think that someone in this office [mayor] has much more control over that, or can at least initiate the conversations with their other partners in government more readily.”

To address expenses, Scanlon has implemented a soft hiring freeze. Vacant positions for which money has been budgeted are likely to go unfilled.

“Non-essential, non-revenue-generating jobs will be heavily scrutinized before they’re ever approved — if they even are approved,” he said. 

He said discretionary spending by departments “will be severely, seriously restricted” through the remaining six months of the fiscal year. And he’s instructed department heads to slash their funding requests by 10 percent from current levels for the next city budget, which Scanlon must submit to the Council in April.

But cuts on paper won’t solve the city’s problems. The Council in 2023 cut Brown’s proposed allocations for police and fire overtime by $3.5 million in order to make the math work for their amendments. (“Much to my dismay,” Scanlon told Investigative Post, though he voted in favor of those changes.) Overtime costs that year ran $14.6 million over budget, according to the city comptroller.

“It doesn’t do us any good to cut [costs] on paper, and then at the end of the year, have to pay for them somehow,” Scanlon said.

“I used to ask commissioners every year during budget, ‘Is this the number? Please don’t give us a fake number. Don’t come in and say it’s going to be seven if it’s going to be 10, because you’re creating a $3 million hole.”

Scanlon said he’s established an executive office charged with finding ways to make city government “more efficient … more streamlined” in order to achieve a “real, tangible restructuring of the budget.”

Raising money

Scanlon acknowledged the city also needs to raise more money. 

Brown, during his long tenure, was reluctant to raise property taxes, relying instead on one-shot cash injections — from the city’s reserve funds, from the sale of city properties, and ultimately from federal pandemic aid — to make his budgets appear balanced. Brown also tried to implement other cash-generating programs, such as fees on tickets to cultural performances, school-zone speed cameras and a hotel bed tax. Some failed for lack of legislative support, others because of community opposition once enacted. 

Scanlon pushed many of Brown’s revenue-generating initiatives. For example, in 2018 he introduced a measure that added 13 new fees for the Traffic Violations Agency to impose and collect. The fees would “add at least $100 to virtually all traffic cases,” Investigative Post reported at the time. Those costs disproportionately affected poor people of color, community advocates argued, and led to license and registration suspensions that cost them even more.

About a quarter of the Council initiatives he sponsored or co-sponsored were geared toward raising money for the city, according to a legislative history provided to Investigative Post by his office.

Scanlon said he has new revenue-generating initiatives in mind, most of them requiring approval from the Council, the state Legislature, or both. He wouldn’t go into detail about them.

“I think my colleagues in government deserve to hear from me what we want to do and how I could use their help long before they read about it,” he said. Residents would hear about those initiatives “in the next couple weeks.”

That was a month ago and there have been no announcements. But there may be a clue as to one such a measure in a resolution filed last month by Council Majority Leader Leah Halton-Pope, entitled “Divesting of Real Estate that Does Not Fiscally Benefit the City of Buffalo.” The resolution calls for a report detailing lease agreements for various city-owned properties and a cost/benefit analysis to determine whether the city should sell them.

Scanlon said his administration would not seek a bailout from the richer government bodies that have come to the city’s rescue in the past.

“You’re not going to see me go to the county, the state, the federal government with my hand out, without us having our house in order first,” he said.

No “hard” control board

Nor does Scanlon see value in the control board reverting from its current “soft” advisory role to “hard” oversight of city finances. 

The state imposed the control board when it came to the city’s financial rescue in 2003. In the decade that followed, the control board used its broad powers to veto budgets and override contractual obligations to help the Brown administration downsize city government and build up more than $100 million in reserve funds.

In 2012 — the same year Scanlon joined the Council — the control board shifted into an advisory role. By 2019, the Brown administration and the Council had spent those reserves down to zero in order to keep pace with rising costs without raising property taxes.

“The control board, I think, serves a very good purpose in the advisory role that it plays right now — reviewing our budgets, reviewing our expenditures, things of that nature,” Scanlon said. 

“I’ve always viewed a hard control board as simply kicking the can down the road. You can freeze hiring. You can freeze contracts. Eventually the bill comes due. I mean, we saw it here before — we had $100 million right? But you have to start settling contracts, and there’s back payment involved, and all this stuff, and it gets gobbled up quickly.” 

There’s no “overnight fix” to the city’s chronic structural budget imbalances, Scanlon said. He anticipated it would take several budget cycles to wean the city off Brown’s habit of overestimating revenues and underestimating costs.

As an example, he noted that the Brown administration consistently underestimated the cost of police and fire overtime in order to create the appearance of a balanced budget.

“It’s just being funny with your numbers, and you’re not going to get that out of this administration,” he said. “You’re going to get honest numbers in our budgets moving forward.”

Geoff Kelly