ALUMNI CONVOCATION PART II EXPLORES THE BUFFALO FISCAL STABILITY AUTHORITY AND THE CITY’S ECONOMIC FUTURE

Michael Risman discusses the City of Buffalo’s future

Following the first part of the annual Alumni Convocation program, “Doing Business Across the Bridge,” the second part dealt with the Buffalo Fiscal Stability Authority and the city’s economic future.

            James Magavern ’59, a partner in Magavern, Magavern and Grimm, LLP, discussing the nature and origins of Buffalo’s fiscal crisis, argued “the nature of the problem has been misrepresented by the assumptions of the legislation creating the board and the predominant public rhetoric.”

            Those assumptions, he said, include “a weakened economy, population decline and job losses compounded by a nationwide recession.” Those factors are inarguable. But he took issue with the idea that structural imbalance in the city’s finances, and the city’s increasing reliance on annual increases in state aid, are significant causes of its problems.

            “This formulation of the problem deflects attention from the real sources of the problem and the place we should be looking to to achieve real remedies. That is state law and state policy,” he said. “It deflects attention from the need to look at what state government is doing and not doing right.”

            In 1972, he said, the city (excluding its school district) had a population of 440,000 people and 6,665 employees. Today, with a population of 293,000, it has fewer than 3,000 employees. “The argument that the municipal government has not shrunk along with the population is simply not true.”

            Magavern pointed to the state’s imposition of Medicaid costs on local municipalities; what he called the “relatively low level of state assistance to education” except in Buffalo; growing pension and fringe benefit costs that are largely determined by state law; and “collective bargaining rules the state has imposed which make it very difficult for the localities to bargain effectively with their unions.”

            And he argued that increases in state aid to Buffalo have been in line with those granted to other New York cities. “This has been a progressive change and a proper one,” he said. “The property tax cannot support the cost of government anymore.”

            Richard Tobe ’74, a member of the fiscal control board, noted the severe hit the city’s tax base has taken: “Buffalo’s tax base, particularly its industrially driven tax base, has almost disappeared. The manufacturing sector, which pays far more in taxes than it uses in services, has been particularly hard-hit.”

            In 1998-99, he said, the combined value of all property in the city – residential, commercial and industrial – was $8.12 billion. In 2002-03 it had fallen to $5.28 billion, “a decline of just epic proportions.” Also, he noted, more than two-thirds of the city’s residential properties pay less than $1,000 a year in taxes.

            Tobe, who worked in Albany for 13 years as chief aide to the late Assemblyman Bill Hoyt, said that on the state level, “One of the things that has happened is that the reserves of good will that used to exist for Buffalo have been consumed. It used to be pretty easy to get a little more aid for Buffalo. It just ended, in a way that seems so harsh. The rhetoric from Albany and even here in our business community has turned from sympathetic to cold and callous.

            “There has been an accumulation of peeves that has grown to a very great level. It is compounded by this public perception locally that Buffalo has done nothing to help itself. It just is not true.”

Michael Risman ’79, City of Buffalo corporation counsel, noted the difficulties of the much-touted push toward streamlining services through consolidation between governments.

“You have many, many layers of government: highway superintendents, villages, towns, school districts, sewer districts,” he said. “There are seven school districts in Cheektowaga; there are five in various parts of Amherst.” All of these entities, he said, have their own bodies of law to be worked through.

As for privatization – turning over some municipal functions to private companies – Risman called it “a very difficult thing. I think some in the community think we should sell off the garbage collection duties,” he said. “If we didn’t have a Taylor Law (governing municipal employees) and didn’t have the Public Employment Relations Board, that would not be a problem.”

            He also cited the Triborough law, which says that when a union contract expires, all the benefits stay the same until a new contract is in place. “It means that you do not have the leverage; in fact, the unions have the leverage,” he said. “The police and fire departments have no interest in negotiating with us because they know they can get a better deal through arbitration.”

            Risman concluded, “I am extremely concerned about the future of the city. With the wage freeze, I think you are going to see a lot of good career employees of the city leave because they cannot live with no wage increases for four years. We are seeing a lot of people leave city government because of the uncertainty of our financial situation.”

            The final speaker, Jaeckle Fleischmann & Mugel LLP partner Sean Beiter, has represented the city in arbitration under the Taylor Law and was part of the negotiations that produced the groundbreaking current city police contract.

            “Taking over the representation of public employers is kind of akin to being given command of the Titanic after it hit the iceberg,” he said. “There is a lot of significant damage that has already been done, but you can screw things up very dramatically quickly. There are a lot of critical issues that need to be addressed, and no matter what you do it looks like there might not be enough lifeboats to save everybody.”

            He echoed Risman’s concerns about the Triborough law and how it hamstrings union negotiations: “The employer cannot impose a contract that takes away benefits. There are actually unions across the state that are looking at health insurance and saying the increases in health insurance are outpacing the raises that unions are getting. We are better off taking a zero increase in pay and keeping our health insurance.”

About the police contract, Beiter noted that some critics wondered why the city needed to bargain for the right to downsize the force. “The union has a right to request impact negotiations over such reductions,” he said. “They can argue that layoffs increase the hazards to officers on the street, so they can go back to interest arbitration and ask for more money. In Jamestown, an interest arbitrator agreed with the union and gave them another raise on top of their current contract.”

            Similarly, Buffalo has announced it will close some fire companies, and it has received a request to enter interest arbitrations on the hazard issue.