Purpose of Budget Review
Our Office completed a limited-scope review of the City’s budget. The purpose of our review was to determine the City’s structural budget deficit (budget deficit) – the gap between recurring revenues and recurring expenditures. To accomplish this objective, we reviewed the proposed 2026-27 budget, audited financial statements and other financial data.
Background
We determined that the City’s general fund will have a projected budget deficit of approximately $103 million, in part, because City officials historically have adopted budgets that relied on nonrecurring revenues to fund operations and underestimated expenditures. Therefore, City officials relied on and depleted fund balance to finance the budget deficits. As a result, the City no longer has surplus fund balance available to help balance the proposed 2026-27 budget.
Officials included a real property tax increase of $46.1 million in the proposed 2026-27 budget to help address the projected budget deficit and plan to address the remaining budget deficit of $56.9 million with non-recurring revenues and other revenue sources. However, these revenues may not materialize. As such, officials must ensure that sufficient resources are available in subsequent years to finance recurring expenditures.
The Mayor’s proposed 2026-27 budget includes general fund revenues and transfers-in totaling $681.1 million and appropriations and transfers-out totaling $681.1 million. This represents an increase of approximately 10 percent from the current fiscal year’s adopted budget of $622 million. However, the City Comptroller projects the City’s actual 2025-26 general fund spending to total approximately $671 million. Therefore, the proposed 2026-27 budget represents a 1.5 percent increase over the actual projected spending for the 2025-26 fiscal year.
Key Findings
- The proposed 2026-27 budget includes non-recurring revenues and revenue that may not materialize, totaling $56.9 million as follows:
- $16.2 million from the collection of past due amounts from previous years, including $10 million from past due real property taxes and $6.2 million in other fines and violations.
- $15.2 million from the sale of City parking structures to the Buffalo Municipal Parking Authority.
- $15 million of Temporary Municipal Assistance State aid.
- $10.5 millions of gaming revenues for which there is no current Compact agreement.
- The proposed 2026-27 budget does not account for potential increases resulting from impending collective bargaining agreement (CBA) negotiations. Five of the City’s eight CBAs are expired, and the remaining three will expire in June 2026.
- The general fund historically funded annual solid waste fund operating deficits. As a result, as of March 30, 2026, the solid waste fund owes the general fund $27.3 million and does not have sufficient resources to repay the general fund. The proposed 2026-27 budget relies on a 25 percent increase in solid waste user fees to eliminate the annual operating deficit in the solid waste fund.
Key Recommendations
- Better align recurring revenues with current service costs,
- Discontinue using non-recurring revenues to fund ongoing operations, and
- Develop realistic financial plans that include rebuilding and maintaining adequate fund balance and reserves.