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Controller and deputy controller warn deficit borrowing is a short-term fix as cash flow turns sharply negative
Summary
Deputy Controller Delano Dowell reported a February ending cash balance near negative $66M and projected negative cash through May; the controller's office and council members urged structural revenue or expenditure changes rather than relying on deficit bonds.
Deputy Controller Delano Dowell told the Committee on Finance that the city began February with a negative cash balance of $39,576,000, received $23,108,000 in February receipts and dispersed $49,501,000, leaving a negative ending cash balance of $65,969,000. He projected negative cash-flow through May 2026 that could peak at roughly $94.9 million in the absence of corrective measures and anticipated recovery in June when larger state aid payments arrive.
"We had a negative cash balance of $39,576,000," Delano Dowell said, and he later summarized February figures: "The city brought in $23,108,000 in the month of February. The city dispersed $49,501,000 during the month of February ending ... with a negative cash balance of $65,969,000." The office reported year-to-date receipts and disbursements through February that leave the city materially below the starting cash balance for the fiscal year.
Council members pressed the administration and controller on the options. The controller's office cautioned that deficit borrowing would be a short-term fix and emphasized the need for structural measures to align revenues and expenditures. Several members echoed concern about passing costs to taxpayers and asked for immediate, specific plans to identify cuts and revenue options. The administration said deficit bonding was being considered as an additional tool and that a mix of borrowing, spending adjustments and revenue proposals were under development.
Committee members asked about the city's contractual debt limit (cited by staff as $1.751 billion) and the interplay with shared banking arrangements with the Buffalo Public Schools. The deputy controller warned that continued reliance on the schools' cash would be unsustainable if the board's own cash position deteriorates.
The committee asked the controller to produce a third-quarter gap report and for the administration to supply the mayor's budget and related gap-closing proposals for review; council also requested clarification on how state aid assumptions (including a possible $30 million AIM payment) affect the projected deficit.
