Good news, bad news for Buffalo finances

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One-shot revenues and belt-tightening efforts have erased the deficit Buffalo’s government faced in the fall, but expensive legal settlements and overtime costs threaten to derail that progress.

The city’s finance commissioner in December reported the city was running an $18 million deficit just three months into the financial year, which began July 1. That’s because Byron Brown’s administration had all but emptied the city’s reserves to plug unanticipated shortfalls in the previous year’s spending plan. Acting Mayor Chris Scanlon and the Common Council had planned to use those reserves to balance the current budget.

To address the resulting deficit, Scanlon and the Council swept the last of the city’s federal pandemic relief money — $17.2 million, much of which had been earmarked for community groups — into the city’s general fund. Scanlon also ordered a “soft hiring freeze,” which left scores of budgeted staff positions unfilled, as well as other cost-saving measures.

Those measures worked — to a degree. Last week Finance Commissioner Ray Nosworthy submitted to the Council a second quarter financial report that shows the city ending its financial year this June with a modest surplus of $1.3 million.

That’s the good news. The bad news is that the good news is fragile.

Revenues are projected to finish $25.2 million above budget. The “primary driver for the positive outlook,” according to the report, is the sweep of federal pandemic money and a plan to use the last $3.6 million in the city’s reserve funds to make ends meet. The sale of city-owned properties is projected to bring in $2.8 million more than budgeted, too. 

None of that money is recurring, however, which means it won’t be available when Scanlon and lawmakers adopt next year’s budget in June. That budget, and those in succeeding years, will have to meet rising costs for city services without the benefit of the federal COVID relief funds that kept the city afloat for the past four years or the once-robust reserves used to balance budgets before the pandemic. 

Last summer the Buffalo Fiscal Stability Authority — the state-imposed financial control board — estimated the city’s four-year financial plan relied on between $101 million and $131 million in one-shot or “unsupported” revenues — that is, money that past experience suggests may not materialize.

The city’s share of city sales tax is coming in a bit higher than anticipated. 

However, other revenue sources are underperforming expectations. Property tax collections are projected to fall $4.3 million short. Fines and fees are running $5.6 million under budget. 

On the expense side, Scanlon’s hiring freeze is having the desired effect in every department except the two most expensive: police and fire. Personnel costs for those two departments are running nearly $5 million over budget, largely as the result of overtime  — a chronic problem Investigative Post analyzed in November.

The police department is projected to cost $1.6 million more than budgeted, the fire department $3.3 million more.

Of the 2,765 city jobs included in the current year’s budget, 295 of them were unfilled as of Dec. 31. Many of those vacancies are streets and sanitation workers — the folks who plow snow, fix potholes and collect trash, according to Department of Public Works Commissioner Nate Marton, who discussed the matter at last week’s Civil Service Committee meeting.  

A bunch of those jobs have been filled in recent weeks, but Marton’s department nonetheless was running $2.2 million under budget as of Dec. 31, according to the report. Only Nosworthy’s Department of Administration, Finance, Policy & Urban Affairs is running leaner, with projected savings of $2.5 million compared to its budget.

Coming in third for savings was the executive office, which includes Scanlon’s mayoral staff, the Office of Strategic Planning, the Traffic Violations Agency, and a handful of other divisions. Sixteen vacancies — out of 106 budgeted positions — are projected to cut nearly $1.5 million from the executive’s $9.1 million budget.

All told, Nosworthy projected departmental costs will finish $5.8 million under the budget adopted last June.

However, those savings are wiped out by the rising cost of settling lawsuits against the city. Legal settlements were over budget after just six months and are expected to surpass $10 million through June 30. That’s $5.6 million more than the mayor and the Council forecast.

This week the Council moved a total $4 million from other budget lines to fund past and pending legal settlements. Much of that will be used to pay the second installment of an $8.7 million settlement with Darryl Boyd and John Walker Jr., whose 1977 murder convictions were overturned in 2021.

There were another $1 million in legal settlements before the Council for approval this week.

One of those is $65,000 for Curtis Lee Dean, the motorcyclist injured when Buffalo’s infamous “Angry Cop,” Richard Hy, intentionally backed into his bike while both were stopped at a red light.

The biggest settlement on the docket this week is $650,000 to a Riverside man badly hurt when, in February 2019, a city lamppost fell on his head as he was walking to his job at the since-closed Dalmatia Hotel on Tonawanda Street. 

Nosworthy told lawmakers at Tuesday’s caucus meeting that the additional $4 million for legal settlements came from reducing budgets across city departments for supplies and outside services like consulting. The money came from 43 different budget lines, in sums ranging from $646,000 from the city’s information technology department all the way down to $100 from Community Services.

Niagara District Council Member David Rivera joked it was “good to know you can shave off” so much money from departmental expenses.

“I hope you find more of those,” Rivera said.

“At this point I’m scraping the bottom of the barrel,” Nosworthy replied.

Geoff Kelly