Buffalo and the Rust Belt

1
Buffalo and the Rust Belt

• PSC 312 Urban PolicyDr. Joseph
  StefkoUniversity at Buffalo, SUNYFall 2007

2
A Historical Sketch

• Once a large, vibrant city
• One of the largest in the U.S.
• Thriving economy based on location
• Competitive edge waned
• City began to contract
• Economic, demographic stagnation
• Now, severe financial challenges

3
Buffalos Rise

• In the mid-1800s, Buffalo was one of the most
  influential cities in the U.S.
• Buffalos early competitive advantages
• Large population
• Beginning of significant growth
• Location

4
An Economy Built on Water

• Canal and lake shipping
• Among nations largest port cities
• Catalyst for economic growth

5
(No Transcript)
6
(No Transcript)
7
(No Transcript)
8
Buffalo Harbor

• Incredible shipping activity yields growth and
  innovation
• Automated grain elevator
• Expansion of Buffalo Harbor (1847)
• Passenger traffic begins to grow, in addition to
  goods

9
(No Transcript)
10
Other Factors in the 1840s

• First major university (UB)
• First railroad
• Massive influx of immigrants
• Vibrancy continues through century

11
The Nations Largest Cities

• 1900
• NYC
• Chicago
• Philadelphia
• St. Louis
• Boston
• Baltimore
• Cleveland
• (8) Buffalo
• San Francisco
• Cincinnati

1910 NYC Chicago Philadelphia St.
Louis Boston Cleveland Baltimore Pittsburgh Detroi
t (10) Buffalo
1920 NYC Chicago Philadelphia Detroit Cleveland St
. Louis Boston Baltimore Pittsburgh Los
Angeles (11) Buffalo
1930 NYC Chicago Philadelphia Detroit Los
Angeles Cleveland St. Louis Baltimore Boston Pitts
burgh (13) Buffalo
12
The Nations Largest Cities
1960 NYC Chicago Los Angeles Philadelphia Detroit
Baltimore Houston Cleveland Washington DC St.
Louis (20) Buffalo
1970 NYC Chicago Los Angeles Philadelphia Detroit
Houston Baltimore Dallas Washington
DC Cleveland (28) Buffalo
1940 NYC Chicago Philadelphia Detroit Los
Angeles Cleveland Baltimore St.
Louis Boston Pittsburgh (14) Buffalo
1950 NYC Chicago Philadelphia Los
Angeles Detroit Baltimore Cleveland St.
Louis Washington DC Boston (15) Buffalo
13
The Nations Largest Cities
1990 NYC Los Angeles Chicago Houston Philadelphia
San Diego Detroit Dallas Phoenix San
Antonio (50) Buffalo
2000 NYC Los Angeles Chicago Houston Philadelphia
Phoenix San Diego Dallas San Antonio Detroit (58)
Buffalo
1980 NYC Chicago Los Angeles Philadelphia Houston
Detroit Dallas San Diego Phoenix Baltimore (39)
Buffalo
2005 NYC Los Angeles Chicago Houston Philadelphia
Phoenix San Antonio San Diego Dallas San
Jose (66) Buffalo
14
Population Trend
15
Buffalos Economic History

• Built on manufacturing
• Production economy
• Grain distribution
• Aircraft (1920s)
• Automobile (1900-20s)
• Power
• Lumber
• Chemical Industry (1920s ?)
• Steel

16
Bethlehem Steel

• Acquires Lackawanna Steel in 1922
• By 1940s, is worlds largest
• Employs 20,000 through 1960s
• Reduction begins in 1970s
• Steel-making ended in 1982
• Plant closes in 1983

17
Changing Economic Character

• Competitive advantages wane
• Immigration slows/stops
• Filling in of Erie Canal
• Role of outside interests
• Great Depression
• Delay in New Deal
• Founding industries collapsing

18
Changing Economic Character

• Dependence grows
• Diversification declines
• Founding industries gone by 1950s
• St. Lawrence Seaway (1960s)
• Growth of Buffalos suburbs
• UB North Campus
• Bethlehem Steel closes

19
Buffalos Economy Today

• Largest Employers
• State Government
• Federal Government
• Tops Markets
• Erie County Government
• Buffalo City School District
• UB
• Kaleida Health
• MT Bank
• HSBC Bank USA
• Catholic Health System

20
The Economic Toll

• Lack of economic growth
• Rapidly declining population base
• Poverty concentrations
• Decaying tax base
• High unemployment rates
• Suburbanization of wealth

21
Buffalos Control Board

• Buffalo Fiscal Stability Authority Act(signed
  into law July 3, 2003)
• Other control board examples
• Washington DC (1997)
• NYC (1975)
• Yonkers (1975)
• Pittsburgh (2004)
• Philadelphia (1991)
• Nassau County (2000)
• Erie County (2005)

22
Historical Context of Control Board

• Decades of decline
• Ability to grow revenues weakens
• Elastic revenues, defined
• State aid increases in late 1990s
• Post-2001 impact
• State Legislature requests OSC review

23
State Comptrollers Report

• Long-term economic weakness
• Population decline
• Structural budget deficit
• Growth in budget gaps

24
A Look at Buffalos Budget

• 300 million
• Major revenues are NYS, Sales Tax and Property
  Tax
• Vast majority is employee-related cost
• Health insurance, pensions driving costs
• 2,500 employees in City government

25
State Comptrollers Report (continued)

• Projected growth in budget gaps (up to 50
  million in 2004 if problems werent addressed)
• First to recommend a control board Buffalo
  Oversight and Recovery Board
• Legislature takes findings, negotiates bill w/
  Governor creating Board

26
The Control Board

• 9 members (5 by Governor, 1 by State Legislature,
  1 by OSC, Mayor and CE)
• Chair, Vice Chair appointed by Governor
• Diverse board Public, private and non-profit
  sectors Community leaders Experts in their
  fields

27
Control Board Powers

• Four-Year Financial Plan
• Approval/Rejection of Budget
• Ensure budget balance
• Close budget gaps
• Can impose budget plan if necessary
• Can freeze wages if necessary
• Can impose hiring freeze if necessary
• Can borrow on behalf of City

28
How the Financial Plan Works

• How the City must close its budget gaps
• 30 in 2004
• 45 in 2005
• 60 in 2006
• 80 in 2007
• 100 in 2008 and thereafter

29
How the Financial Plan Works

• New actions with recurring value
• Narrow (and eventually close) structural budget
  gap
• Deficit borrowing
• Easing the Citys way to budget balance
• Avoiding draconian budget/service cuts

30
Whats Next for Buffalo?

• Accomplishments w/ the Control Board
• How long is the Control Board in place?
• A challenging agenda
• A new Mayor
• What should the focus be?
• What are Buffalos assets? Liabilities?