Thinking about innovative solutions to Buffalo’s looming financial crisis

Buffalo’s new fiscal year began July 1 and has already been the subject of a few leaks. The state Legislature took no action on a proposed hotel occupancy tax, which was expected to raise $4.2 million by June 30, 2025. The Buffalo City Council rejected a proposal to raise city parking fees, which was expected to generate $2 million in additional revenue. This is the first in a series of revenue shortfalls or likely underestimates in some spending categories.

Council is considering changing the city’s budget approval process, which would give it more time to review and revise the mayor’s proposed budgets. If passed, it would help a bit. But process is not money, and the city needs a lot of money. The upcoming budget will start with a $40 million-plus hole created by the use of one-time revenues this year. The aforementioned negative revenue measures will add another $6 million to that gap. Then, if the city government chooses to use additional federal one-time pandemic revenues to plug the 2024-25 hole, the problem will only get worse the following year.

Aside from a desire for a larger share of the county’s sales tax revenue and additional state funding, no real solutions have been proposed to the looming financial crisis. Buffalo’s Fiscal Stability Authority has so far made no recommendations to improve the city’s “fiscal stability.” While all that stands still, citizens who want to see the city in better financial health and thus better able to serve residents, businesses and public institutions have offered some suggestions. Talk about innovative thinking.

Citizen action

Our City in Action Buffalo describes himself as “A broad coalition of Buffalo residents who have come together to disrupt the political status quo in our city through movements, citizen-centered policies, and co-governance structures. We work to change systems and shape policies to ensure racial, social, and economic justice for all Buffalons.”

In June, the organization released a well-researched and well-written report on the city’s tax procedures, The rich don’t pay, but you do: free rides in the city because the report analyzes in detail certain aspects of the city’s property tax revenues.

Among the conclusions:

• “Payments from the largest taxpayers have decreased significantly,” citing in particular a public service and a bank. Estimated annual tax loss: $350,000
• “Payments by high-net-worth homeowners (defined as owners of properties valued at $400,000 or more) have declined significantly.” The declines are attributed to successful tax assessment challenges, which the report found are more common among wealthy property owners. Estimated annual tax loss: $300,000 to $400,000
• “Large and wealthy property owners have successfully challenged their property assessments, significantly reducing their tax bill.
• Real estate developers benefit from significant tax breaks from the city. Ten major developers “pay about $6 million less a year in taxes than they would pay without the (tax-exemption) programs.” This amount is mitigated to some extent by PILOTS (payments in lieu of taxes).

The report recommends:

• “A full and transparent investigation into the above (issues raised)as well as the overall distribution of the city’s property tax burden must be carried out, particularly before the city’s revaluation process…
• “The city should consider implementing a progressive property tax structure. This can be done through higher rates on high value assets properties, exemptions for lower value owner-occupied properties properties and other mechanisms…
• The city should stop subsidizing all real estate in the future. development project that does not meet the needs of the city housing crisis, which further aggravates the city’s commercial situation real estate crisis…
• “The city should end the use of PILOTS to reduce property tax rates. real estate developers, because they privatize in an unfair and undemocratic manner control of city funds.
• “The city should ensure an open and accessible process across Which city residents can participate in improving equity evaluations…
• “The city should report annually on the specific measures it has taken. taken to ensure that the tax burden is distributed fairly between “Income levels must be high and the richest must pay their fair share.”

Mayor Byron Brown, in an interview about the report published in the Buffalo Newsstressed that recommended policy changes regarding programs such as PILOTS and tax exemptions could only be achieved through state legislation. Variable property tax rates based on the value of a property could also require state action.

Some other ideas