Control Board looking at Ryan's $500M loan request

Buffalo, NY (WBEN) With Mayor Sean Ryan seeking a loan of up to $500 million to help Buffalo get out of its fiscal crisis, many are looking to the Buffalo Fiscal Stability Authority, more commonly known as the control board, to see what can be done.

Fred Floss is a member of the control board, and he says right now, the fiscal stability authority is in an advisory capacity. "We've said for the last few years that there were going to be large budget deficits and that there wouldn't be unencumbered reserves to cover those deficits, as there have been in the past, and we have made suggestions, particularly raising property taxes and things over a number of years to be able to try To bring the city back into balance," explains Floss.

Floss says there are several options. "One of them is legislation before the New York State Assembly to allow the control board to borrow money without going into a control period," explains Floss. "Why that's important is that while we if we do that and not going into a control period, it's less likely to impact future bond ratings for the City of Buffalo. So we're looking to see what happens with that legislation that may be part of the budget, so we may know in April whether or not that legislation goes through another part of this process, as we've seen, was that former mayor Scanlon offered to sell two of the parking ramps, And they're going to have to be political choices. We may have to do both, have both the legislature and sell the parking ramps if the budget deficit gets this high to allow us to be able to balance our budget this year and the next year, but we're still going to have to raise property taxes going into the future."

Floss says don't expect the board to pursue the max amount Ryan wants. "We are not going to borrow anything more than what the city needs to get out of this crisis to its budget so that we can bring the city back and provide the services that people deserve," notes Floss.

Ken Kruly of Politics and Other Stuff says there's a large cap the control board can help the city with. "For the time being, they would have a pay back 10 years, is what I'm reading from the control board. And that would get the city over the hump temporarily. It would not solve the problem. But the whole idea of the what the mayor is talking about, is try and get the budget into balance with the tax increases and whatever other economies they can put together," says Kruly.

Kruly says because the board is in an advisory capacity, they can't do anything that specifically controls or makes changes in what the city is doing. "I think they could have been a little bit more aggressive in pointing out the accumulating deficits that are coming because there are substantial deficits or variety of things that the control board is not really made a point of emphasizing. They've been talking about the immediate rather than the future, but that that's what the problem is right now," surmises Kruly.

Kruly says the control board has the authority to sell bonds, and they have better rates than the city of Buffalo has. "The thing is that doing that would trigger a hard board status rather than an advisory status," warns Kruly. He says the city is looking to have the state pass legislation which would allow the deficit financing to go forward without the control board going into hard board status, leaving the city in control of the its operations, so the control board at the moment is not in a position to go ahead with this unless the state legislation is passed.