Buffalo mayor wants to exceed debt cap by $82M in budget

The $110 million plan would leverage nearly $300 million in infrastructure investment from city, state and federal governments, leading to more than $1 billion in direct and indirect economic impacts, Scanlon told The Buffalo News on Thursday.

But his first major test in his first two months in office might be getting his ambitious plan approved.

The proposed capital budget would be $82 million over the $28 million debt cap recommended by Buffalo Comptroller Barbara Miller-Williams. No capital budget request has exceeded the debt cap since she became comptroller in 2019, she wrote in a Nov. 14 response to Scanlon’s plan.

Scanlon is asking the Common Council to authorize exceeding the cap. The city can afford to borrow more, he said in his Nov. 1 budget submission to the Council.

“There are tough decisions to be made ahead with the city’s operating budget, but the solution is not to destroy the assets that make our community special,” he said. “This capital budget, much like this operation as a whole, is going to look to do things differently, and we’re going to look to do things that maximize the benefit to the city of Buffalo and its residents. And if we can go out and borrow $109 million and to have it turn into a billion dollars in return for the city of Buffalo, that’s a win-win situation.”

Last year, Mayor Byron Brown proposed and Council approved a capital budget that borrowed $27 million, when the comptroller’s debt cap was $27 million.

Miller-Williams says it is “fiscally unwise” to significantly increase the debt cap now, particularly given the city’s current and future fiscal uncertainties.

The city is facing a looming deficit in its operating budget that could be in the tens of millions of dollars with questionable plans to close it.

“It might be fiscally prudent to pause and close out existing projects as a cost-saving measure prior to embarking upon new initiatives,” Miller-Williams said.

Miller-Williams is recommending the Common Council rethink exceeding the debt cap.

“I implore all approving parties to seriously reconsider increasing the current debt cap and the financial implications involved,” Miller-Williams said.

“The city is projected to face significant fiscal challenges ahead as the American Rescue Plan Act funding is over, the fiscal 2026 pension payment is expected to be $11.3 million higher than this year’s payment (which is $8.8 million higher than the fiscal 2023 payment),” she said. “There are labor contracts that have expired or will be expiring at the end of this fiscal year, which include the police, firefighters, white-collar and blue-collar contracts as well as other budgeted revenue sources included in the fiscal 2025 budget that are not expected to be realized. These concerns have been raised consistently throughout the years and most recently in my budget response issued on May 10, 2024.”

However, she did propose “a more modest one-time increase” in the debt cap by $7 million, to $35 million for 2025 with the possibility of revisiting excluded projects in the future.

The Common Council will review Scanlon’s capital budget proposal on Dec. 3 at 11 a.m. Council members must approve a capital budget by Dec. 15.

The mayor’s $110 million capital budget proposal is broken down into three areas:

Recommendations from the Citizens Planning Council account for $27.2 million of the budget proposal. CPC is a group of community volunteers who reviewed requests for capital spending from Council members, city department heads, cultural and education organizations operating city-owned buildings, and others.

The spending recommendations include $600,000 set aside for citywide demolitions, $500,000 for electric vehicle charging infrastructure, about $6.3 million for equipment and building renovations for Buffalo fire and police departments, approximately $16.9 million for citywide street and sidewalk improvements as well as upgrades to buildings, parks and the purchase of equipment in the Department of Public Works.

The total repayment for the CPC recommendations is about $34.7 million, according to Miller-Williams.

Scanlon’s plan includes borrowing $55.4 million on behalf of Buffalo Public Schools in a one-shot deal, he said.

“This will be the only time I will be making this request to the Comptroller because I am urging the New York State Legislature to reauthorize the Joint Schools Construction Board so that BPS can borrow on its own,” said Scanlon.

The borrowing is up to 97% reimbursable by the state, and the school district will pay for the remaining 3% as well as cover any costs the city incurs when borrowing for the projects, Scanlon said.

The total repayment would be $72.8 million in estimated principal and interest, said Miller-Williams, who is “particularly concerned about” issuing the bond on behalf of the school district.

About $24 million of it is earmarked for a buildout of Buckham Hall at SUNY Buffalo State University for moving the school district’s Leonardo da Vinci High School there, and about $30 million is to pay for building repairs at several district facilities.

Miller-Williams pointed out that Buckham Hall is neither owned by the city nor utilized by a broad segment of BPS students, and as of her Nov. 14 response to Scanlon’s budget proposal, her office has not received confirmation from the New York State Department of Education on the reimbursement rates.

“If the reimbursable funding should fall short of the 97%, it remains unclear who would be responsible for covering any shortfall. Additionally, questions currently remain about whether NYSED approval will be secured in time for the Capital Bond Sale,” Miller-Williams said.

In addition, increased borrowing raises the city’s debt service, which creates challenges for next year’s budget, she said.

Scanlon’s budget recommendations also include borrowing $26.8 million in Bond Anticipation Notes (BANS), which are smaller, short-term bonds that are issued by governments, such as local municipalities, looking to generate funds for upcoming projects, Scanlon said.

The BANS that Scanlon is requesting would allow the city to leverage over $200 million in outside funding from the state and federal governments, which require upfront dollars to get projects started, Scanlon said, including the Cars Sharing Main Street initiative.

City officials have typically used interfund loans to front the money for such projects, but the full amount of interfund loans has been leveraged already for previously approved work.

The BANS will cost the city $900,000 in interest and issuance costs, according to Miller-Williams.

But if the city does not issue the BANS, it would lose $204 million in state and federal funds that have been appropriated already, and the projects are ready to go, Scanlon said. Not issuing the BANS will also severely impact the city’s ability to obtain future federal and state appropriations.

Scanlon’s 2025 recommended capital budget can be found here.