The City of Buffalo faces a projected general fund budget deficit of approximately $103 million in the 2026-27 fiscal year, in part, because the city historically has adopted budgets that relied on nonrecurring revenues to fund operations and underestimated expenditures, according to a budget review released today by New York State Comptroller Thomas P. DiNapoli.
“Buffalo used up its savings and one-time federal pandemic aid to cover past budget shortfalls, and now that money is gone and there’s no extra cushion left to help balance the proposed 2026-27 budget,” DiNapoli said. “While city officials have taken some steps to address the projected budget deficit, they should also focus efforts on better aligning recurring revenue with recurring expenditures to help restore long-term fiscal stability for the city.”
Fiscal Year 2026-27 Budget
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% from the current fiscal year’s adopted budget of $622 million. However, the city comptroller projects actual 2025-26 general fund spending to total approximately $671 million. Therefore, the proposed 2026-27 budget represents a 1.5% increase over the actual projected spending for the 2025-26 fiscal year.
A real property tax increase of $46.1 million is included in the proposed 2026-27 budget to help address the deficit while city officials plan to address the remaining shortfall of $56.9 million with non-recurring revenues and other revenue sources that may not materialize.
Those include:
- $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; and
- $10.5 million of local tribal casino proceeds for which there is no current agreement.
The analysis notes the city has previously relied on non-recurring revenues including federal stimulus funds and surplus fund balance to balance its budgets. For example, the city used $331 million in federal stimulus funds since the 2020-21 fiscal year to help fund operations without identifying other revenue sources to replace the temporary funding.
Revenues
The city derives 76% of its revenues from real property taxes, sales tax and state aid. The proposed 2026-27 budget includes total real property tax revenue of $230.6 million, an increase of 25% from the 2025-26 fiscal year. Sales tax, which is shared by Erie County, increased approximately 7% from $114.9 million budgeted in the 2025-26 fiscal year to $122.7 million in the proposed 2026-27 budget. The proposed budget includes state aid consisting of $161.3 million of Aid and Incentives for Municipalities, which has remained flat for more than 10 years.
Appropriations
A total of $478.3 million of projected city expenditures are contractual, personnel-related costs including salaries, pensions and healthcare for active employees and retirees. While the proposed 2026-27 budget includes these expenditures, it does not account for potential increases resulting from impending collective bargaining agreement negotiations. Five of the city’s eight such agreements are expired, and the remaining three will expire in June 2026.
Though not included in the proposed 2026-27 budget, the general fund has historically funded annual solid waste fund operating deficits because the common council did not ensure user fees were sufficient to fund recurring solid waste fund expenditures. As a result, as of March 30, 2026, the solid waste fund owed the general fund $27.3 million and does not have sufficient resources to repay that amount. The proposed 2026-27 budget relies on a 25% increase in solid waste user fees to eliminate the annual operating deficit in the solid waste fund.
The city’s ability to address the budget deficit is constrained by limited local revenue sources and contractual expenditures, and a multi-faceted approach will be needed to resolve the deficit. Going forward, city officials must:
- 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.
DiNapoli’s budget review relied on data and information from the mayor’s proposed 2026-27 budget, the city’s audited financial statements, the city comptroller, and the Buffalo Fiscal Stability Authority.