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Home > Leadership > Mayor > Archive Press Releases > 2008 Archives > March 2008 > State Budget Deficit Continuing National Financial Problems Could Affect C

State Budget Deficit Continuing National Financial Problems Could Affect City Budget

Source/Contact
Office of the Mayor
Peter K. Cutler
Director of Communications
716-851-4841

After Round of Meetings in Albany With Governor and Legislative Leaders, Mayor Brown Reports Growing Challenges to State Budget

Mayor Byron W. Brown today reported that newly sworn-in Governor David Paterson’s compelling message on the continuing state budget deficit and national financial problems is clear: be prepared for further belt tightening.

“Governor Paterson warned state legislators yesterday that further reductions to the state budget made be made in the coming weeks,” said Mayor Brown. “The fiscal realty is that the state’s approximately $4.8 billion deficit and the continuing problems in the nation’s economy and financial markets have the potential to create severe challenges for cities like Buffalo.  That’s why my Administration created an annual reserve fund – a ‘rainy day’ fund – in our current budget.  This nearly $42.2 million fund is designed to insulate the city from any future financial shortfalls, including potential cuts in state aid.”

Albany is deeply concerned about the collapse of the New York City-based investment house, Bear Stearns; the mounting evidence that we are in a national recession; and the national sub-prime mortgage crisis. All of these matters signal significant problems with our national economy, which trickle down to the state and, ultimately, to cities such as Buffalo.

Mayor Brown also stated, “Governor Paterson added that compounding the problem, the Federal Reserve decreased interest rates by a quarter of a percentage this past weekend in an attempt to halt a further financial meltdown. He referred to the reeling national economy, its effect on the state and he called for leaders in business and government to come together over the next few weeks and be prepared to adjust the state’s budget accordingly. The Governor called on leaders in government and business to meet with him in the next couple of weeks and adjust the state budget accordingly.”

Based on these escalating state and national financial problems, Mayor Brown is again calling upon the Buffalo Common Council to codify into law his Administration’s plan to establish a “rainy day” fund for the city, as well as make law the city’s submission of a four-year financial plan.

The City of Buffalo is required by state law to submit annually to the Buffalo Fiscal Stability Authority (BFSA) a four-year financial plan. 

In the city’s 2007-08 budget, Mayor Brown called for the creation of an annual reserve fund (i.e., “rainy day” fund) that equals 30 days or 11.5% of the city’s operating expenses, which totals approximately $42.2 million for the current fiscal year. This action is of particular importance to Wall Street credit rating agencies (e.g., Moody’s; Standard and Poor’s) who look very carefully at a city like Buffalo’s ability to insulate itself from economic downturns (e.g., cuts in state aid).

As required by the City Charter, Mayor Brown on May 1, 2007 submitted his proposed $418 million 2007-08 city budget to the Common Council.

“Last July, following the efforts of a working group comprised of top staff from my Administration, the Common Council and the City Comptroller’s office, I submitted a proposed revised local law to the Council that would have required the annual submission of a four-year financial plan and the creation of a ‘rainy day’ fund that would be maintained by my and any future Administration,” said Mayor Brown. “Unfortunately, after the local law was sent to the Council’s Legislative Committee in July, it was then received and filed by the Common Council in November, which killed the proposed change to the law.”

Mayor Brown will again file this local law this week with the Common Council.

“Again, this is an effort to put into law a sound fiscal policy for the City of Buffalo that will carry on through my and all future Administrations, and I hope the Council hears the message I have carried from Albany and I urge them to this time take action,” said Mayor Brown.