Nearly a year ago, City Comptroller Mark J.F. Schroeder was warning that Buffalo’s pool of unrestricted funds was dwindling, and could soon be gone.
The city’s fortunes have changed considerably since then, and it now has the highest total fund balance in its history, and the portion that can be used for any purpose has increased by more than 500 percent.
“The record-level fund balance is definitely an indicator of Buffalo’s financial strength,” Schroeder said, though he warned that much of it will be needed to pay future expenses.
In January, Schroeder warned that if credit rating agencies saw continued use of the fund balance to cover recurring expenses, the ratings could be affected, which would trigger higher borrowing costs.
The Brown administration’s conservative financial policies, the way in which it settled a labor contract with firefighters, and an infusion of cash from revenues at the Seneca Buffalo Creek Casino all helped to increase the city’s surplus funds.
Schroeder on Monday released the city’s audited financial statements from 2012-13, which showed that the city has a $165.8 million surplus, including $63.9 million in unrestricted fund balance, which is free and clear, up from $12.2 million last year.
The rest of the fund balance is not free and clear. It includes $35.7 million, or enough to cover a month’s worth of expenses in the case of a natural disaster or other emergency; $24.6 million that can’t be spent for various reasons, including money that must be paid to cover a deficit in the solid waste fund; $11.1 million that is restricted to pay back bonds and for other uses; and $30.5 million set aside to settle lawsuits against the city or to cover a budget deficit.
The city had budgeted to spend $11.5 million in unrestricted fund balance in the fiscal year that ended June 30, but it never needed to, mostly because the city kept expenses low.
Building on $11.5 million in unrestricted surplus that wasn’t used, $16 million came in from three years of slot machine revenues from the casino, and $33 million that had been set aside to settle union contracts moved into the unrestricted category.
The recently settled firefighters contract will cost the city an estimated $23 million, after savings from health insurance are taken into account. Those costs will be covered by funds the city saved for that purpose.
Schroeder said that there are parts of the city’s fiscal policy, set by Mayor Byron W. Brown and the Common Council, that he does not agree with but that “I feel very confident” about the city’s fiscal outlook.
Brown’s spokesman did not respond to a request to comment on the financial statements Monday. Friday, however, Brown said during a meeting with the administration’s top financial appointee, Donna J. Estrich, that the city had worked hard to increase its credit ratings.
The city recently received some other good financial news, when credit rating agency Moody’s called Gov. Andrew M. Cuomo’s announcement of a $1.7 billion investment in a South Buffalo brownfield a “credit positive” for the city, which has an A1 rating from Moody’s.