City’s ‘rainy day fund’ may help to ease any immediate pain
State cuts could cost Buffalo $10 million
Gov. David A. Paterson’s plan to close a state budget gap could slash up to $10 million in aid to Buffalo, the city’s finance chief warned Tuesday.
Janet Penksa said such cuts could make it difficult to negotiate new contracts with city employee unions.
Meanwhile, Buffalo’s control board estimated the city’s potential hit to be $8 million in reduced aid, and its executive director predicted Albany’s fiscal woes could intensify in future years.
“This is just the beginning,” said Bertha H. Mitchell.
Fortunately, said Mitchell, the city has been practicing conservative budgeting. Buffalo has established a “rainy day fund” of about $30 million, and the reserves could help ease any immediate pain, assuming state lawmakers approve Paterson’s cuts.
“[The city] should be able to weather these cuts relatively well,” said Mitchell.
But she said the fiscal turmoil in Albany reinforces a message that Buffalo’s control board has been espousing since it was created five years ago.
“We’ve been preaching that you can’t spend every penny you get from the state, because at some point, the state is going to have problems,” she said.
Budget analysts for the control board and the city have been reviewing the impact Paterson’s proposed cuts could have on Buffalo’s bottom line. About $8.4 million in possible reductions have been pinpointed, but Penksa said the total hit could approach $10 million if state lawmakers approve Paterson’s plan.
“The problem would become having to negotiate our labor contracts in this environment of fiscal uncertainty,” said Penksa. “If these cuts hold,
most of the reserves we’ve put aside for new labor contracts would be gone.”
Penksa said that without the additional state aid, any salary increases included in new labor pacts would have to be offset by benefit reductions or other savings.
The proposed state cuts would also adversely affect Buffalo’s neighborhood improvement plans and economic development initiatives, Penksa said.
The finance commissioner plans to travel to Albany Monday to discuss the city’s concerns with state officials.
Does Penksa share Mitchell’s concern that the state’s fiscal condition could worsen in future years, possibly triggering more severe funding cuts up the road?
“Not necessarily, but Albany is very difficult to predict,” Penksa replied.
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