Buffalo, N.Y., is facing dangerous financial waters ahead with a rapidly declining fund balance, according to the city’s fiscal watchdog.
City Comptroller Mark Schroeder said in a press conference Tuesday that Buffalo used nearly $35 million in reserves for the 2017 fiscal year with the fund balance now down to $6.5 million. He said a “structurally imbalanced budget” caused by “overly optimistic revenue projections” has led the city to rely too heavily on reserves for budgeting.
“There’s trouble in River City and we need to do something about it,” said Schroeder, who lost a Democratic primary bid for mayor in September against incumbent Byron Brown. “The city of Buffalo’s reserves are dwindling.”
Mayor Brown told reporters in response to Schroeder’s press conference that part of the budget challenges stem from $7 million in casino revenue from the Seneca Nation of Indians tied up in arbitration and another $7 million from land sales that haven’t closed yet.
Both Moody's Investors Service and S&P Global Ratings revised their rating outlook for to positive from stable in April ahead of a $25.5 million general improvement serial bond sale, due to an improved economy in New York State’s second largest city. The city’s debt is rated AA-minus by Fitch Ratings, A-plus by S&P and A1 by Moody’s.
Buffalo has $220 million in outstanding general obligation debt, according to Moody’s.
“We have built a fund balance for times like this where there are some unforeseen financial circumstances and we will be able to use that fund balance because we’ve been conservative in our budgeting,” said Brown.
Buffalo was on the verge of bankruptcy in 2003, but has seen fiscal momentum in the last five years with three one-notch bond rating upgrades.