The appointment of an 18-year City Hall veteran to be Mayor Byron W. Brown’s top financial adviser was greeted with a standing ovation Tuesday in Common Council Chambers.

Donna J. Estrich, who rose through the civil service ranks, was sworn in by Council President Richard A. Fontana as commissioner of administration, finance, policy and urban affairs following a unanimous confirmation vote of the Council.

Estrich, 57, replaces Janet E. Penksa, who left City Hall to be executive director at the Jacobs Institute, an innovative startup on the Buffalo Niagara Medical Campus.

In a brief statement to the Council, Estrich stressed the importance of collaboration.

Estrich was upbeat about city finances during a later interview, noting ongoing economic development projects and the property tax freeze instituted by Brown, which will hold for at least another year.

The appointment occurs a week after an annual report on the fiscal year that ended June 30 was released by Comptroller Mark J.F. Schroeder. The report found that a $16.3 million budget gap was filled in with money from the fund balance, and it warns against continuing to use the fund balance, as it has done the last three years, which Estrich said the administration understands.

“We can’t continue to use that, and we have to be smarter with how we’re spending our money,” she said.

The city’s sales tax receipts have increased, while other revenues, such as utility taxes, have fallen.

Estrich predicted that health care costs will increase slightly in the new budget year, which begins July 1, and that while pension costs are rising, they should flatten out.

The city relied on state aid for 37 percent of its revenues last year, according to Schroeder. Brown administration officials have said they are hoping to keep the aid at the same level and are not expecting an increase, given the state resources that are needed to clean up from Superstorm Sandy.

Estrich was praised by the Brown administration and Council members for being an expert on city finances.

Council Member Bonnie E. Russell, who has been the only woman on the Council since she took office in 2004, said Tuesday that she was happy that a woman was being appointed to the post.

Russell said Estrich worked closely with Penksa and that she knows city finances well.

When Estrich came to City Hall in 1994 as an audit inspector, she got to know all of the departments by auditing them, from the Aud to the zoo, she said.

Estrich has a bachelor’s degree from Buffalo State College and is working on a master’s in public administration.

She became budget director in 2007 and had been interim commissioner for six months in 2006 after Finance Commissioner James B. Milroy resigned and before Penksa was appointed. Estrich was management budget analyst for five years before that.

As commissioner, she will be a member of Brown’s CitiStat panel, in which top aides question department heads about their performance during televised meetings, and will represent the city during control board meetings when Brown cannot attend.

Estrich’s new position will require her to resign from the city’s Water Board, she said.

The commissioner’s salary, $119,239, is the highest in the Brown administration.