CITY OF BUFFALO FISCAL YEAR BUDGET OVERVIEW

Transcription

1 CITY OF BUFFALO FISCAL YEAR BUDGET OVERVIEW BYRON W. BROWN MAYOR STEVEN M. CASEY First Deputy Mayor JANET PENKSA Commissioner of Administration, DONNA M. BROWN Deputy Mayor DONNA J. ESTRICH Director of the Budget

2 CITY OF BUFFALO FISCAL YEAR BUDGET A Message from Mayor Byron W. Brown The City of Buffalo s budget for the upcoming fiscal year will total $460,564,120, an increase of just over 2.5%. Each city department shares in our need to reduce spending to solve a $24 million budget gap and are asked to do more with less by delivering city services more efficiently. All department budgets are reduced from present levels. With New York State struggling to close a nearly $10 billion budget deficit, the state s largest municipalities are facing double digit budget gaps; reductions in state aid and rapidly escalating costs for the state employee retirement system are among the primary causes. These municipalities are making or considering significant workforce reductions, including layoffs, and substantial increases in fees and property taxes. Unlike many other taxing jurisdictions in the state, Buffalo will not need to raise property tax rates or fees to close its budget gap. The city s budget gap is closed with prudent usage of fund balances and over a dozen re-engineering initiatives. These initiatives are designed to streamline services, eliminate redundancy, improve efficiency in the provision of city services, and save taxpayer dollars. For example, costly Injured on Duty benefits for police officers and firefighters will be returned to their respective departments, resulting in better oversight and case management that will lower the costs to the city and, ultimately, the taxpayers. Nonmandated services, such as directly providing substance abuse services, will be eliminated; the city instead will coordinate services and referrals for residents. A total of 49 vacant and active positions have been selected for elimination, primarily excluding those that save money, raise revenue, provide critical city services, or are required due to collective bargaining agreements or civil service rights. A total of 43 police officer vacancies have been temporarily eliminated until a new exam can be administered and a new class can be brought through the academy. While the budget eliminates 49 positions, the need for deeper layoffs has been averted because of our ability to restrain spending over the course of my Administration. As a result the city could accrued a sizeable healthy fund balance to weather this difficult economic time we are currently experiencing. This fund balance will be used not only to close gaps in the upcoming fiscal year, but is required to reduce gaps projected over the course of the city s entire four-year financial plan. Without sustained growth in state aid and restrained growth in employee benefits, Buffalo, like the other large cities in New York State, will face even deeper budget gaps in the future. Continued reduction of the property tax rate for all and the tax burden for many residents of the City of Buffalo has been the centerpiece of my Administration over the past four years. While we were able to reduce the tax rate for residential properties in this budget by 2.7%, formulaic provisions of the New York State Property Tax Law prevent us from reducing the commercial tax by the same percentage. However, this circumstance allows us to restore equity in the rate reductions between commercial and residential properties. With this 2.7% residential rate reduction, the tax rates for residential and commercial properties will have decreased by approximately 15% each since my term as Mayor began in Our fund balances were accumulated with the help of the taxpayers. It is only right that a portion be remitted to them every year in the form of rate reductions. Yearly tax decreases, no matter how small, send a message to those considering investing in Buffalo that this city is committed to providing an affordable environment in which to live, work, and do business. We will not take steps backwards in the progress we have made in reducing the property tax burden or join other municipalities that have had to raise rates to close their budget gaps. Property Tax Rates Fall During Each Year of the Brown Administration Fiscal Year Residential Property Tax Rate Reduction Commercial Property Tax Rate Reduction % -3.6% % -9.2% % 0% % -2.1% % 0% TOTAL TAX CUT -15.2% -14.9%

3 CITY OF BUFFALO FISCAL YEAR BUDGET Earlier this year, I had proposed setting aside $15 million of the city s fund balance to provide $5 million for residential property tax relief, $5 million for economic development and $5 million for quality of life programs. While I have been able to include a small residential property tax rate reduction in this budget, these additional investments are beyond our means presently, with significant amounts of our fund balance required to close future year budget gaps. However, should the fiscal situation change in the future, I am committed to moving forward with these investments. Presently, I must recognize the obligation I have to the residents of this city to maintain quality services. To continue to improve the quality of city services without raising taxes or fees, we will provide city services smarter and more efficiently. And, our resources will be targeted toward measures that will continue the progress we have made in making our streets safer, growing Buffalo s economy, improving city neighborhoods, and creating job opportunities for our youth. Funding to support a new police class, 2,000 employment opportunities for city youth, nearly 900 demolitions of blighted and vacant properties, and 500 rehabilitations of vacant or owner occupied property are also included in our spending plan. Other initiatives incorporated in this budget include the creation of a new Department of Parking, with the consolidation of on- and off- street parking. A new Parks Division has been allocated sufficient funding to run a quality parks system and support the work of the Buffalo Olmsted Parks Conservancy. Additionally, economic development in the city will be strengthened with the consolidation of all economic development functions within the Office of Strategic Planning; redundancy and confusion is eliminated with the proposed dissolution of the Buffalo Economic Renaissance Corporation and the strengthening of the Buffalo Urban Renewal Agency under the supervision of a new Executive Director of the Office of Strategic Planning. This city budget reflects the same principles adhered to in my earlier budgets and the promises I made both when I first took office in 2006 and as I renewed my oath of office earlier this year enhance economic vitality, improve quality of life in the city, and provide government efficiency, accountability, and transparency. Brown Administration FY Budget Gap Closing Initiatives Workforce reduction of 49 positions Savings: $3.5 million annually Dissolution of the Buffalo Economic Renaissance Corporation (BERC) with a strengthening of the Buffalo Urban Renewal Agency (BURA) and the Mayor s Office of Strategic Planning Savings: Long-term reduction in administrative and program costs. Consolidation of city and BURA purchasing Savings: $100,000 annually Consolidation of all city parking services Savings and increased revenue: $3,200,000 Information Technology consolidation in City Hall Savings: $150,000 annually Re-engineering adjudication services Savings and increased revenues: $125,000 Elimination of non-mandated substance abuse direct services Savings: $800,000 annually Automation of Time and Attendance System Savings: $1,000,000 beginning in FY Administrative re-engineering of Injured on Duty (IOD) benefits program for uniformed fire and police personnel Savings: Long-term from better case management Employee Health Insurance Re-engineering Savings: $400,000 annually Zoning and Land Use Reform Savings: Long-term reductions in staffing and associated costs for site plan reviews and zoning variances. New Water Contract Savings: $2,500,000 New Recycling Contract Savings: Long-term reduction in landfill tipping fees Re-engineering Postal Operations Savings: $100,000 annually Asset and Property Management Plan Savings: $1,750,000 beginning in FY Byron W. Brown Mayor, City of Buffalo

4 FY Budget Overview The City of Buffalo s FY budget totals $460,564,120 an $11,479,996 increase from the FY Adopted Budget or 2.6%. A budget gap, estimated earlier this year to be $24 million is closed with departmental re-engineering measures, a reduction in workforce, spending reductions in each city department and maximization of all available revenue sources. The city s budget gap is attributable to the state s own fiscal crises, which resulted in a $3.4 million loss in state aid to Buffalo, and rapidly escalating state pension charges, which have increased the city s share for employee pension costs by $10.7 million. This increase represents a 63% increase in the city s contributions for blue and white collar employees and others in the New York State Employee Retirement System (ERS) and a 17% increase in the city contributions toward the pensions of firefighters and police officers. This situation could have been significantly worse, with even deeper spending and personnel reductions, had the Brown administration not adhered to conservative budget practices throughout the past four years. As a result, the city was able to accrue a $48 million unreserved undesignated fund balance and a $33 million rainy day fund. Use of a portion of the fund balance enabled the city to significantly offset the budget deficits projected for next year and over the course of its four-year plan. The Impact of the New York State Budget Deficit on the City of Buffalo New York State is presently struggling to address a budget deficit estimated by the New York State Comptroller to be approximately $10 billion and growing as the legislature fails to adopt a state budget and make progress toward closing its deficit. The State Director of the Budget attributes the state s deficit to the continued economic downturn. Others, such as the New York State Comptroller, attribute it to chronic overspending as compared to available revenues. Regardless of the cause, New York s budget problems are having a deep and profound impact on municipalities across New York State, particularly the large upstate cities, which are all highly dependent on state aid.

5 Budget Crisis Across New York State The outlook is equally bleak for many of the other large cities in New York State with significant layoffs, tax increases, and service reductions already occurring. Buffalo FY Budget for city operations: $461, 000,000 Original deficit: $24,000,000 Deficit represents 5% of total budget Proposed Gap Closing Actions Workforce reduction of 49 positions Elimination of direct substance abuse services Re-engineering of city services with 14 initiatives to consolidate functions, improve efficiency, and reduce costs. Albany FY 2011: Budget for city operations: $163,000,000 Projected deficit: $20,000,000 Deficit represents over 12% of total budget Proposed Gap Closing Actions: Reduction of equipment Elimination of employees Elimination of firefighters Restructure of employee health care, including higher co-pays Rochester FY 2010 Budget for city operations: $440,000,000 Original deficit: $36,000,000 Deficit represents over 8% of total budget Gap Closing Actions: City budget submission pending Syracuse FY : Budget for city operations: $278,693,857 Original Budget Gap/Deficit: $35,000,000. Deficit represents over 12% of the total budget Proposed Gap Closing Actions: $2.4 million reduction in spending 5.4% increase in property tax rates 9% increase in water and sewer fees Overtime reduction of $1.4 million Workforce reduction of 91 employees, including 83 layoffs Yonkers FY 2010: Budget for city operations: $409,200,000 Original Budget Gap/Deficit: $61,500,000 Deficit represents over 15% of total budget Gap Closing Actions: Discretionary spending held flat for third consecutive year 4% increase in property taxes Limited garbage pickup to one day per week for entire city Two fire companies closed Police reductions at every precinct Cancellation of all non-revenue producing parks and recreation programs Elimination of funding for community groups Reduction of 233 employees, resulting in the smallest city workforce since 1997 As of this date, New York State leaders have not agreed on a state budget for the coming fiscal year. By all accounts, this inaction may lead to an increase in the size of the deficit, ultimately requiring additional spending cuts. This places the city s finances at increased risk and underscores the need for the city to make structural changes in spending and limit its reliance on one-shot surplus funds to close its budget gap this year and in future fiscal years. Continued spending reductions, involving additional workforce restructuring, will be required to balance future year budgets in the absence of state aid increases.

6 Tax Rate per $1,000 FY Budget: Major Initiatives While the FY budget is an austere budget, certain priority areas are supported based on the Brown Administration s commitment to enhance economic vitality, improve the quality of life in the city, and deliver quality city services efficiently. Enhancing Economic Vitality The budget includes a series of measures to improve the business climate in the city, bring individuals and families back into city neighborhoods, and streamline the processes within City Hall for businesses and individuals seeking to invest in the city. Property Tax Rate Reductions One of the best measures of economic vitality in the city is growth in the assessed value of real property. And, one of the best means to stimulate the economy is through reductions in the tax burden on businesses and residents. Unlike many regions in the nation, Buffalo s property values have steadily and consistently increased since Over the course of this period, the cumulative growth in the value of residential and commercial property grew by 13.6% and 14.0%, respectively. Since FY , all of this growth was returned to the taxpayers in the form of tax rate reductions. For the upcoming fiscal year, the budget includes a 2.7% reduction in the rates for residential properties, which will be seen by 85% of property owners. The budget holds the line on commercial property tax rates so as to not hinder economic development in the city. In order to maintain proportions and compliance mandated by the state s Real Property Tax Law, the city is unable to reduce commercial rates commensurate with residential rates. $40.00 $38.00 $36.00 $34.00 $32.00 $30.00 $28.00 $26.00 $24.00 $22.00 $20.00 $18.00 $16.00 $14.00 The Brown Administration Continues to Make Progress Toward Relieving the Property Tax Burden $37.41 $36.08 $32.76 $20.95 $20.75 $19.78 $32.76 $32.06 Total Residential Tax Cut= 15% Total Commercial Tax Cut= 14.9% $18.83 $ $32.06 $17.95 Reorganization of City Economic Development Agencies and Functions Proposed city charter changes accompany this budget to separate the economic development functions from city permit and licensing functions. A stronger Office of Strategic Planning results in a single entity and access point for businesses seeking to do business in the City of Buffalo. The existing Department of Economic Development, Permits and Inspections will be downsized to the Department of Permits and Inspections. The Mayor has recommended dissolving the Buffalo Economic Renaissance Corporation and strengthening the Buffalo Urban Renewal Agency under the leadership of the Executive Director of the Office of Strategic Planning. These actions will eliminate the redundancy in staffing, programs and confusing lines of responsibility, communication, and coordination that exists among the Office of Strategic Planning, the Department of Economic Development, Permits and Inspections, the Buffalo Urban Renewal Agency, and the Buffalo Economic Renaissance Corporation. In addition, there will no longer be separate agencies for commercial and residential development. This consolidation will create one development entity empowered with the full complement of tools necessary to realize the objectives established in partnership with neighborhood residents and businesses. BURA s new mission will be to support neighborhood economic development that builds around the city s commercial cores, with a concentrated effort of housing revitalization, demolitions, infrastructure improvements, and to provide loans and grants to businesses to create stronger neighborhoods. This action also creates a much more visible entity with stronger oversight. Zoning Reform The city s spending plan calls for the investment of $1.5 million in efficiency grant funding to conduct a comprehensive zoning reform process to develop a citywide land use plan and update the city s outdated, inefficient, and conflictive zoning and land use regulations. Reductions in the commercial tax rate, however, have been significant to date. From FY , commercial tax rates have decreased by nearly 15%. Under the provisions of this budget, residential rate reductions catch up to those provided to commercial properties with a cumulative 15.2% decrease. Equity is now restored between commercial and residential rate reductions.

7 Place-based neighborhood and economic development Comprehensive zoning reform, in tandem with the reorganization and re-engineering of city economic structures and programs, will act as the foundation for the development of a new place-based economic development strategy for Buffalo s neighborhoods in every section of the city. City services and investments will be integrated and focused in well defined places, whether a newly renovated school, a business corridor, or similar neighborhood assets. Investments will be strategic and comprehensive. For example, housing initiatives will be paired with business development around commercial corridors. The goal is to promote and create walkable, vibrant neighborhoods. Creating Economic Opportunity through Job Creation Funding for 2,000 summer and winter youth jobs is included in the budget. This brings the total number of jobs created through the Mayor s Summer and Winter Youth Employment programs to 12,000 over the course of the Brown Administration. Drastic cuts in federal and state programs that have supplemented the city s contribution to youth employment have made it impossible to meet prior year numbers. Nonetheless, the city is maintaining its annual contribution of approximately $1 million in spite of its own budget challenges. 4,000 3,500 3,000 2,500 2,000 1,500 1, Mayor's Youth Employment Program Participants ,764 2,536 3,200 3,628 Targeted Investments in Economic Initiatives 2, The Buffalo Niagara Film Commission will receive an increase of $25,000 for a total allocation of $100,000 to perform its critical work in attracting the film industry to Buffalo. In 2009, the Commission was directly involved in national network television show and feature film projects in Buffalo that brought $10.1 million of direct spending by the television and film production companies into the city and region. Improving Our Resident s Quality of Life This budget extends the Brown Administration s commitment to improving the quality of life for city residents through increased public safety, stronger neighborhoods, and programs to support individuals and families, particularly those in, or at risk of, poverty. Public Safety: $400,000 in efficiency grant funding is set aside to recruit and train a new class of police officers in , the soonest court and state law requirements governing the recruitment process can be met. City Parks: Since 2006, the Brown Administration has invested over $14 million in capital money in our city parks. The budget includes $6 million to fully support a quality city parks system. Last year, Erie County returned management of city parks to the city. Over the course of the past year, the city has set up an organizational structure that involved lengthy union negotiations, forged an agreement with the Buffalo Olmsted Parks Conservancy to continue operating the Olmsted Park System, and began work to take over and improve city parks. The city plans significant investment in improving its parks with a set aside of $1.1 million in block grants for park and playground improvements in low and moderate income neighborhoods. Improvements will include installation of shelters, roof replacement, play structures, bleachers, and security lighting. Neighborhoods: Since 2006, significant progress has been made in demolishing blighted and vacant property and rehabilitating units that are salvageable. The Mayors 5 in 5 Plan committed to demolishing 5,000 and rehabilitating 500 structures within five years. Since 2006, over 3,000 demolitions and 500 rehabs have been conducted. This year s budget and other city funding commitments set aside resources to conduct over 500 demolitions and approximately 100 property rehabilitations. Further progress is limited by the elimination of the state s RESTORE NY program. Maintaining Our Commitment to City Schools: The city will share with the Board of Education nearly half of its total property tax revenue, maintaining its annual commitment to city schools despite its own budget challenges. Of the $144,316,356 to be raised in property taxes over the course of the upcoming fiscal year, $70,322,758 will be transferred to the Board of Education to support the city s school system.

8 Closing the Gap The city s $24 million budget gap is addressed with a series of re-engineering and austerity measures and by maximizing the full potential of available revenue. Each city department contributes to closing the gap with reductions in each to total $3.1 million. Re-Engineering Initiatives Since the onset of the city s fiscal crises in 2001, the city has implemented several efficiency measures. This budget includes re-engineering measures designed to improve the efficiency and quality of city services while lowering costs. Parking Consolidation: Consolidating off- and on- street parking operations under one Department of Parking, as recommended by a city commissioned parking study, will allow for enhanced and streamlined customer service, greater operational efficiency, and revenue maximization. Savings and increased revenue are estimated at $3.2 million. Information Technology Consolidation (IT): Merging Police Department IT operations into the Department of Management Information Systems, will eliminate duplication and improve inter-departmental IT policies and operations. This enables the elimination of two IT positions in the Police Department and will add additional savings with standardized buying and system equipment and maintenance. Savings are estimated at $150,000 annually. Dissolution of the Buffalo Economic Renaissance Corporation (BERC) and Strengthening of the Buffalo Urban Renewal Agency (BURA): Re-engineering city economic and neighborhood development programs to launch a place based neighborhood development initiative will improve city neighborhoods and its economy. This will also allow for the elimination of duplicative and unnecessary services and programs that are either ineffective, disallowed by federal program regulations, or are more appropriate for the private sector. Long-term savings in administration and program costs are anticipated. Consolidation of Purchasing: Transferring the purchase of supplies and materials for BURA to the city s purchasing division will lower administrative and product costs. Economies of scale and better pricing through bulk purchasing, will save approximately $100,000 annually. Consolidation of Adjudication: Transferring to the Law Department s existing legal staff adjudication of all city violations, other than parking, so as to centralize and expedite proceedings, will improve efficiency and revenues. Moving to the new Department of Parking adjudication of all parking infractions, including those resulting in ticketing by police officers will allow for the elimination of one position and continuity in the ticketing, adjudication, and collections process. Savings and increased revenues are estimated at $125,000 annually. Elimination of Non-Mandated City Service: Phasing out the role of the city as a direct provider of substance abuse services and restructuring the Division to serve as a convener and facilitator of substance abuse services in the City of Buffalo, will link those in need with the proper service provider. Long-term savings to the city will total $800,000 annually. Automation of Time and Attendance System: Automate time and attendance and other personnel managing systems for off-site locations will lower costs and improve efficiency and accuracy of compensation and benefits. Approximately $1 million in annual staffing and overtime costs will be saved. Administrative Re-engineering of Injured on Duty (IOD) Benefits Program for Police and Fire Uniformed Personnel: Administration of the IOD benefit program will be transferred from the Department of Human Resources to the Police and Fire Department for their respective personnel. Improved case management and provisions to ensure a smoother transition of those injured on duty from the city system to the New York State Pension System will also accompany these transfers. Long-term savings, while impossible to estimate, are anticipated to occur through better overall case management. Employee Health Insurance Re-engineering: Benefits from the pharmaceutical portion of the city s employee and retiree health insurance plans will be administered through a self-insurance plan, which will save taxpayer dollars approximating $400,000 annually. Future year gaps and taxpayer burdens will be alleviated with a more comprehensive self-insurance program. Zoning and Land Use Reform: A new land use plan and zoning code will provide for the coordination of and/ or elimination of the multi-layered set of land use regulations presently in place that include zoning, overlay districts and urban renewal plan areas. This will streamline the approval process in the city by reducing the amount of site plan reviews and zoning variances and reduce city staff time and associated costs required to assist in meeting the legal requirements of zoning ordinances. New Water Contract: Recently, the city s Water Board and Water Authority approved a contract with a new vendor to manage the city s water system that will save city rate payers $2.5 million, while providing better customer service and management of the system. Asset and Property Management Plan: Efficiency funding is set aside to retain engineering consultants to develop a comprehensive evaluation and action plan for city properties and assets regarding repair, capital investment, and staffing needs, as well as to provide a risk

9 assessment. A bar coding and scanning system will also be put in place to track city assets, including equipment and vehicles. A keyless fuel master system will be incorporated into this new system. Savings are estimated to approximate $1.75 million annually New Recycling Contract: The city is selecting a new vendor to provide recycling services that will improve the city s recycling efforts with a change from two separate recycling bins to one recycling tote. Citizens will no longer have to bring recycling to the curbs every week. Instead, an every other week schedule for recyclables will be adopted. Long-term reductions in landfill tipping fees will be realized. Re-engineering Postal Operations: The city will be installing a new postage machine that will allow for savings through eliminating the need to purchase specialty forms (v-folds) and third party billings for bar coding and speeding the sorting of mail, along with deeper discounts for postal rates. Savings to the taxpayers will total $100,000 annually. Workforce Reductions: The total workforce reductions for the city in the upcoming fiscal year will total 49 vacant and active positions. With these reductions, the city s workforce will total 2,596 positions. Positions excluded from elimination are primarily those that save money, raise revenue, are critical to the provision of city services, or required due to collective bargaining agreements or civil service rights. Layoffs were targeted to those areas where re-engineering initiatives allowed for a reduction in force. While the elimination of 43 vacant police officer positions are included, a new exam will be administered so that additional officers can be brought into the force in the fiscal year the soonest a new list of candidates can be issued these positions will then be restored. It was important to eliminate funding for these positions because federal grant opportunities may be lost in certain situations where maintenance of effort requirements cannot be met with unfilled vacancies on the books. Consolidating Parking Services The creation of a Department of Parking under the direction of a Commissioner of Parking will consolidate on-street and off-street parking operations into one city department, in which day-to-day operations can be effectively coordinated with long term plans and initiatives to maximize the efficiency of the parking grid and parking revenues. Pursuant to the recommendations contained in an independent study commissioned by the city and issued in the Desman Report, the Commissioner of Parking would be responsible for the management of on-street parking operations, including: 1. Creating levels and schedules of enforcement 2. Creating budgets 3. Determining when and where collections would take place 4. Determining the adequacy of regulatory signage 5. Overseeing parking meter and pay station repairs 6. Overseeing and coordinating public outreach initiatives, and shall be the Commissioner of Traffic with direct oversight of the Parking Violations Bureau for purposes of Chapter 307 of the City Code. The newly created Department of Parking would consolidate the functions currently performed by both the Commissioner of Administration and Finance who oversees the Parking Violations Bureau as the Commissioner of Transportation and the Parking Director who serves as the Chief Executive Officer of the Board of Parking. The creation of a Commissioner of Parking to oversee the Department of Parking would implement the recommendations of the Desman Report, which determined that the disconnect between the on-street and off-street parking programs results in inefficiency in both available parking utilization and enforcement. In order to accomplish the cost-savings, operational efficiencies and projected revenue increases associated with this re-engineering initiative, totaling $3.2 million, the Common Council would need to approve a series of legislative actions, which include the following: 1. Passage of a Local Law creating the new Parking Department to be governed by Article 17-A of the City Charter. 2. Passage of an Ordinance Amendment, amending Chapter 307, to bring the current Parking Violations Bureau (PVB) under the control and direction of the Department of Parking. 3. Passage of a Local Law, amending of the City Charter to vest the Commissioner of Parking with the authority currently vested in the Director of Parking.

10 Improving the City s Fiscal Health The Brown Administration s practices of conservative and prudent budgeting are continued in the FY budget with spending restraint, continuous efficiency improvements, and prudent stewardship of the city s fund balance. Prudent Use of the City s Fund Balance to Close the GAP While the city s fund balance is tapped to close this year s budget gap and support the following three years of its four-year financial plan, it recognizes the need to maintain healthy reserves. The city s $33 million rainy day fund, is maintained and is strictly reserved for any unanticipated budget deficits that might occur during the course of a city fiscal year. And, at the conclusion of its 2010 through 2014 four-year financial plan, just over $10 million of unreserved, undesignated fund balance will remain untapped. The use of fund balance is considered temporary and it is recognized that long-term structural changes are required in each and every year of the city s four-year plan. The four-year financial plan figures assume future workforce restructurings and efficiency measures to continue to reduce city spending. Revenue opportunities will also be aggressively pursued with continued growth in assessed value providing long-term financial stability with modest revenue growth and continued improvement in the taxing margin. While the plan assumes state aid will remain flat, opportunities for growth exist with any rebounding of the state s economy and revenue stream. $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $- Allocation of Fund Balance Undesignated Unreserved Designated Reserved Designated Unreserved At present, only $48 million of the total fund balance of $120.8 million is unrestricted and unreserved and, as such, is available for gap closing purposes. Large portions of the city s present $120.8 million fund balance---$72.6 million---are reserved and, consequently, untouchable for gap closing purposes according to various provisions in state and local statute and Generally Accepted Accounting Principles. Already the fund balance has been reduced by $17.8 million from its $138.6 high due to an auditor required payment to eliminate a deficit in the enterprise fund so as to avoid a rate increase and to purchase city parks equipment. Commitment to Improve the City s Taxing Margin and Credit Rating An important measure of a city s fiscal health is its taxing margin---the difference between what a city taxes and what it could tax based on the assessed value of property and constitutional taxing limits. Prior to the Brown Administration, the city reported an alarming margin of only 8.03% in FY , meaning it had nearly exhausted its taxing capacity and consequently might be considered at risk of default. Since then, the city has steadily built its taxing margin to a healthy 27.51%, arguably one of the highest in the state. Wall Street has consistently recognized the city s financial progress and rewarded it with consecutive increases in its credit rating, expressing its confidence in the city and lowering its borrowing costs. Fiscal Year Moody Rating S&P Rating 2009 Baa2 A Baa2 BBB Baa3 BBB Baa3 BBB Baa3 BBB Baa3 BBB Baa3 BBB- Today, Buffalo and its residents benefit from the city s highest credit rating in decades. FY and Beyond Each year, the Brown Administration, in managing city finances, demonstrates its willingness to make the tough choices necessary to assure balanced budgets and long-term fiscal health. Given the ongoing fiscal distress facing the nation, and particularly the state, the city will need to deepen its commitment to reducing spending, while at the same time making continuous improvements in providing city services efficiently and with minimal costs.