Buffalo's mayor and comptroller – longtime political allies – could be on a collision course over a plan to replenish the city's reserve funds and restore the confidence of Wall Street rating agencies that have taken a dim view of the city's dwindling fund balance.
Comptroller Barbara Miller-Williams has a proposal that would replenish Buffalo's fund balance – also called reserves – by requiring the city to maintain 60 days of operating expenses, which represents 30 days more than is already maintained in the "rainy day" fund, which currently has about $39 million.
The mayor and Common Council would have to agree to adopt Miller-Williams' proposal as a policy, and the comptroller says it is intended to initiate conversation among City Hall's elected officials.
"I recognize the importance of replenishing the city’s fund balance to achieve future financial security," Miller-Williams said, adding that she has tried to maintain an open dialogue "with all parties involved in the city’s financial decision-making process" and that her plan requires them to "work together collectively."
But there has already been some hesitancy from Mayor Byron W. Brown, who thinks an official policy would be too restrictive to the administration, according to Niagara Council Member David A. Rivera.
"We don't know how much pushback we get from the administration," said Rivera, the Council majority leader. "Right now he doesn't like to be restricted with this fund balance policy. I disagree. I think sometimes we need restrictions to keep us from getting into trouble."
The Council's Finance Committee last week directed staff to set up a meeting between Council members and representatives from the Comptroller's Office and the Brown administration.
Mayoral spokesman Michael J. DeGeorge said there was no discussion about Miller-Williams' proposal prior to her filing it with the Council "and therefore there are no other scheduled meetings about this at the moment."
DeGeorge also pointed out that the city already maintains 30 days of operating costs in the rainy day fund and "anything in addition to that would arbitrarily impact the level of investment in services provided to taxpayers."
Still, the mayor is always open to suggestions from his colleagues in government that they think would be beneficial, "but the executive and administrative powers of the city are very clearly vested in the mayor's office by the City Charter and Code," DeGeorge said.
"As the city's finances continue to improve, there's always room for discussion about the greatest level of protection and/or replenishment of the city's funds. The view of this administration is that it is best achieved by continuing to innovate, create efficiencies and operate at the highest level possible," DeGeorge said.
Miller-Williams' proposal is almost identical to a policy that former acting Comptroller Vanessa Glushefski filed with the Council last April, but the idea never gained any traction and the Council nixed it.
Miller-Williams modified Glushefski's proposal by specifying that if the city's "unrestricted" fund balance falls below the 60-day requirement at the end of any fiscal year, the mayor shall submit a fund balance replenishment plan to the comptroller within 60 days from the release of the city’s audited financial statements. Then within 10 days of receiving the mayor's plan, the comptroller shall submit the plan – along with comments – to the Council, which shall then accept or reject it within 30 days.
The potential tension over the comptroller's plan comes as credit rating agencies have pointed to the repeated use of reserves in downgrading the city. By using millions in fund balance to balance budgets, Brown had frozen or cut property taxes every year since taking office in 2006, until the 2018-19 budget increased property taxes and user fees for the first time during his tenure.
In September, Fitch Ratings – one of the three major Wall Street rating agencies – lowered the city's credit rating from AA- to A+, saying the use of reserves to balance budgets has diminished the city's fiscal resources and its capacity to respond to cyclical economic stress.
That downgrade was in line with the A1 rating from Moody's and the A+ from Standard and Poor's, both of which cited Buffalo's structurally imbalanced budgets and repeated reliance on reserves to make ends meet when they lowered the city's fiscal outlook from "positive" to "stable" in April 2018.
Such moves impact on the interest rate the city gets – and thus how much taxpayers must pay – when the city borrows money.
In addition to red flags from the credit rating agencies, the Buffalo Fiscal Stability Authority has expressed concern over the administration's repeated draw on the fund balance to balance budgets and fill budget gaps. In its Sept. 23 report, the authority said the city's draw down on nest egg funds – one of the categories that make up the fund balance – to zero is "an indicator of fiscal pressure," that the city is under levels recommended by the Government Finance Officers Association and should consider a fund balance replenishment program.
When asked during the Finance Committee meeting how much the comptroller thinks should be kept in the fund balance as a 60-day supply, her special assistant said "close to around $70 million to $75 million, possibly."
But the figure is negotiable, Delano D. Dowell Sr. added. He said the comptroller's goal is to start the conversation, hopefully this month, with the Brown administration, the Comptroller's Office and the Council to come up with a "true" plan so that the city does not have to rely so heavily on fund balance.
"We're not asking that we reserve $70 million in one year. We're looking at over a period of time to build up the fund balance to a 60-day reserve," he said. "It could take two years, three years, four years, five years. We're just looking for a plan."
Council President Darius G. Pridgen agreed the conversation needs to start, but said it should start with a process before a numerical goal is set.
"If we start looking at goal before we look at process, I think we're going backwards. I think one of the encouraging things is just to start to move towards the conversation. But I think the biggest thing is just what is the process, maybe without a goal being stated, because we don't know what's going to happen from year to year," he said.
Every Council member thinks the city's needs to replenish the fund balance, Rivera said. The key is having a policy that will be somewhat restrictive, and will help the city stay on course and set priorities similar to what is done in household budgets, in which families know what they can spend and what they can't.
"I believe that the conversation – how we get there, what the goal is – that's all part of the discussion. But at least to have a policy that begins to replenish it is so important to the City of Buffalo, and the credit rating agencies would look favorably on it," he said.
"There are priorities that come up unexpectedly, and we understand that. That's all part of the discussion that we can have, but let's begin to have this discussion in earnest," he said.
University Council Member Rasheed N.C. Wyatt also said an official replenishment policy would look good with "those who watch our financial records." The discussions don't need to be contentious, but the elected offices need to start planning now.
"This doesn't have to be a push me, pull me" discussion, he said. "It could be us working together."
"We're setting ourselves up for long term stability. That's our goal. ... So we have to make the first step, and doing it collectively I think is a huge benefit for us," Wyatt said. "It's not just one group."
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Comptroller pushes plan to beef up Buffalo's reserves; mayor may push back - Buffalo News
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