Buffalo comptroller battles to keep away from promoting licensed debt

A county decide dominated it was “a dereliction of responsibility.”

The mayor of Buffalo mentioned she was pushed by “ego.” And a councilmember accused her of “political chicanery.”

However Buffalo Metropolis Comptroller Barbara Miller Williams believes she doesn’t must situation bonds town council has licensed. 

“There’s nothing within the metropolis constitution that claims I have to,” Miller Williams mentioned. 

Miller Williams is interesting the Erie Supreme Court docket’s ruling, she mentioned, to protect “unbiased fiscal oversight for future generations.”

The courtroom battle is prolonging expensive delays to Buffalo’s capital program, the mayor argues. And town’s funds, already in bother earlier than the bond spat, are persevering with to deteriorate. 

The dispute

In December, the Buffalo Frequent Council handed the biggest capital funds within the metropolis’s historical past — $110 million — over strenuous objections from Miller Williams. 

Your entire $110 million would require bond anticipation notes, and Miller Williams set a bond cap for town of $28 million. 

Mitch Nowakowski, chair of the Buffalo Frequent Council’s Finance Committee, mentioned that the borrowing wouldn’t truly add to town’s debt burden, as a result of nearly all of the spending is reimbursable. 

The capital plan contains $55.5 million of borrowing on behalf of the Buffalo Metropolis College District, of which New York state will reimburse as much as 97%, and $26.8 million of borrowing reimbursable by state or federal grants. 

The non-reimbursable initiatives within the plan are $27.2 million. Town intentionally stored this portion inside the comptroller’s $28 million debt cap, Nowakowski mentioned, however she nonetheless refused to situation the bonds, insisting that it could be “fiscally irresponsible.”  

Since Miller Williams was first elected in 2019, that is the primary time reimbursable debt in extra of the cap has develop into a query. Since 2012, the college district has financed its capital initiatives with $130 million of refunding financial savings from the refinancing of the Joint Colleges Development Bonds, in line with a report from the comptroller.  

In September, Nowakowski, who accused the comptroller of “political chicanery,” and performing Buffalo Mayor Chris Scanlon sued Miller Williams for failing to carry out her responsibility. Erie County Supreme Court docket Justice Emilio Colaiacovo dominated towards Miller Williams. 

“No matter her intentions, by inserting herself into this course of, the comptroller exceeded her mandate and did not abide by her ministerial rote as supplied within the constitution,” the decide wrote. “Her failure to behave pursuant to the Council’s decision was a dereliction of her responsibility.”

Within the wake of the ruling, Miller Williams launched a press release that mentioned she remained “deeply involved about how that call will have an effect on town’s long-term fiscal stability” and about “the continued lack of urgency from each the Administrative and Legislative branches to handle town’s rising monetary challenges.”

She Wednesday.

The comptroller is an elected metropolis workplace. Miller Williams was elected in 2019 and reelected in 2023 with out opposition.

Unfavorable outlooks

In September, S&P World Scores and Fitch Scores each lowered their score outlook for Buffalo to detrimental. Town is rated A-plus by S&P and Fitch, and A1 with a secure outlook by Moody’s Scores. 

Fitch’s report attributed the outlook drop to town’s weakening reserves and reliance on one-time measures to stability its funds.

“After a reliance on fiscal stimulus moneys and appropriation of unassigned reserves for operations, surprising expenditure challenges, together with authorized settlements and an absence of latest income progress, have strained operations,” Fitch’s analysts wrote.

Nowakowski mentioned he wasn’t shocked by the outlook cuts, and he felt Buffalo’s monetary habits ought to have affected its score sooner. Town spent years balancing its funds with funds from the American Rescue Plan Act. 

Final fiscal 12 months, Buffalo deliberate to stability its funds with its $15 million unassigned fund stability. In December, lawmakers reportedly have been shocked to study that the fund had already been drained by former Mayor Byron Brown to plug gaps within the prior fiscal 12 months’s funds. 

They reportedly patched the hole by spending extra of its reserves and ARPA funds and instituting a “mushy hiring freeze.” Town ended the fiscal 12 months with income exceeding projections, however the dip in reserves was a driving think about its detrimental outlook, in line with Fitch. 

Buffalo can be self-insured and has needed to pay out a number of massive lawsuit settlements up to now few years, famous Howard Treatment, director of municipal bond analysis for Evercore Wealth Administration.

However regardless of town’s issues, it is not precisely debt-burdened, Treatment mentioned. 

Town is barely at 77% of its authorized debt restrict decided by the state comptroller. Fitch describes Buffalo’s long-term legal responsibility burden as “midrange,” which displays “low direct debt and internet pension liabilities in comparison with residents’ private revenue, offset by very excessive carrying prices.”

Issues of competition

At of the Buffalo Fiscal Stability Authority, the consultant for the comptroller argued that the mayor’s workplace and the district had not submitted the mandatory paperwork to draft a bond decision. 

“I felt that that was form of a cop-out,” Nowakowski mentioned, “as a result of the comptroller’s responsibility needs to be facilitating the desire of the council and getting every other documentation they should … efficiently go to bond counsel.”

The authority was created to supervise Buffalo’s funds throughout a monetary disaster in 2003, and transitioned to an advisory function in 2012, in line with town’s most up-to-date .

The comptroller’s consultant additionally argued that town already had greater than $20 million of bond proceeds that have been sitting in its coffers unspent. 

Attendees on the assembly pressed the comptroller’s consultant to clarify how the bond cap was decided. 

Within the comptroller’s report from August, she and Gregg Szymanski, Buffalo’s funding and debt administration officer, wrote that the debt cap is decided by 4 ratios: internet direct debt as a share of common fund revenues, whole debt service as a share of common and debt service fund expenditures, internet direct debt as a share of full valuation and share of bond principal amortizing over the subsequent ten years. 

In response to the report, town is already effectively inside the comptroller’s limits on the primary three ratios. But the comptroller’s projected debt cap barely budges over the subsequent three years, lastly rising to $34 million in 2029 and $36 million in 2030. 

Metropolis of Buffalo

As for reimbursable debt, the report states that “consideration possibly (sic) given to extend the debt cap” for initiatives with devoted income or reimbursements. The comptroller’s delegate to the assembly mentioned town’s assurances that the undertaking prices can be reimbursed weren’t ample.

On Sept. 18, Miller Williams oversaw the sale of $29.4 million of bond anticipation notes with a 2.457% rate of interest. Wells Fargo had the profitable bid. 

In response to the comptroller’s press launch concerning the sale, $22 million of the method will help Buffalo Public Colleges. Miller Williams mentioned these initiatives “are eligible for as much as 97.3% reimbursement from New York State.”

Miller Williams won’t must situation bonds for the remainder of the capital plan whereas her enchantment works its manner by the courts. 

Buffalo is now planning its subsequent capital funds. 

Scanlon mentioned he’s uncertain that the area has the development capability to finish two capital plans concurrently; even when it might, he mentioned, the initiatives within the 2025 funds might price “tens of thousands and thousands of {dollars}” greater than they might have in the event that they have been accomplished this 12 months. 

The price of borrowing might improve, too, Nowakowski added. 

If town delays too lengthy, it could lose a number of the funds altogether. Nowakowski mentioned that so as to qualify for the federal reimbursements, Buffalo should situation the BANs and spend the funds by the top of 2026. 

The remainder of Buffalo’s funds are simply as unsure as ever.

Buffalo balanced its 2026 funds by planning to promote its parking ramps to the newly-formed Buffalo Parking Authority. This does nothing, Fitch analysts famous, to stability the funds in 2027 and past. Plus, Fitch mentioned, the sale “might take time to materialize.”

Sean Ryan, doubtless winner of Buffalo’s Nov. 4 mayoral election, proposed utilizing deficit bonds to stability town’s funds earlier this 12 months.

Ryan beat Scanlon within the Democratic main in June. Scanlon has been performing mayor since October 2024, after Brown resigned.  

“I am not a pessimist,” Nowakowski mentioned. “I consider that it should take loads of issues to have the ability to proper this ship, however I consider that we’ll find yourself doing it.”

The Buffalo financial system provides loads of causes to hope, Treatment mentioned. It has efficiently transitioned away from manufacturing towards healthcare, expertise, and better training.

“It additionally helps that the governor’s from that space,” Treatment mentioned. “They’ve gotten loads of help from the state.” Kathy Hochul was the elected Erie County clerk and represented Western New York in Congress earlier than changing into lieutenant governor in 2025.

For Buffalo’s subsequent capital plan, Nowakowski is not positive he desires to abide by Miller Williams’s debt cap anymore.

“That cap was only a social norm,” Nowakowski mentioned. 

“I am now speaking to different councilmembers, like, ‘Guys, how purposeful is $28 million to get all 9 of our districts’ capital wants in there?'” Nowakowski mentioned. “$28 million yearly to do streets, sidewalks, infrastructure, parks, neighborhood facilities, public proper of how? That is peanuts.”