Buffalo's Budget Deficit Widens as Reserve Funds Disappear

Dec 4, 2024 at 4:03 PM
Ray Nosworthy, Buffalo's acting finance commissioner, faced a challenging first day on the job. With a nearly $18 million deficit one quarter into the financial year and the loss of $15 million in reserve funds used to plug last year's shortfalls, he had to present these grim realities to the Common Council's Finance Committee. The unexpected depletion of savings was driven by runaway overtime costs, especially in the police and fire departments. There are no more reserves left to cover deficits, and the projected deficit for the current budget year is $17.68 million. However, Nosworthy believes the city can close this gap by controlling expenditures and potentially sweeping more federal pandemic relief money into the general fund.

Impact on City Operations

The loss of reserve funds has significant implications for the city's operations. Brown used about half of the $330 million received through the American Rescue Plan for operating costs, neglecting community programs and infrastructure improvements. The finance department is working on an amendment to redirect more relief money to "revenue replacement," but this means nonprofits that were promised funding will now face difficulties. The city will need to find tens of millions of new dollars for future budget years, as past experience suggests some revenue may not materialize.

Acting Mayor Chris Scanlon has demanded 10 percent cuts in expenditures from all city department heads for next year's budget. This includes the police, fire, and public works departments, which make up a large portion of the basic operating costs. Three high-ranking staff members have already left City Hall since Scanlon took office, and permanent successors have not been appointed yet.

Managing the Deficit

Nosworthy outlined measures to address the deficit. A soft hiring freeze has been implemented, with vacant positions in City Hall unlikely to be filled this year unless they generate revenue. Additionally, the administration is likely to use more federal pandemic relief money to plug budget holes. By controlling expenditures and making strategic use of available funds, Nosworthy believes the city can overcome the current financial challenges.

Despite the alarming deficit, Nosworthy remains optimistic. He emphasized that the main driver of the deficit is the absence of fund balance. With proper management and the implementation of these strategies, the city has a chance to stabilize its finances and move forward.