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Buffalo and the Rust Belt. PSC 312: Urban Policy Dr. Joseph Stefko University at Buffalo, SUNY Fall 2007. 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

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buffalo and the rust belt

Buffalo and the Rust Belt

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

a historical sketch
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
buffalo s rise
Buffalo’s Rise
  • In the mid-1800s, Buffalo was one of the most influential cities in the U.S.
  • Buffalo’s early competitive advantages
    • Large population
    • Beginning of significant growth
    • Location
an economy built on water
An Economy Built on Water
  • Canal and lake shipping
  • Among nation’s largest port cities
  • Catalyst for economic growth
buffalo harbor
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
other factors in the 1840s
Other Factors in the 1840s
  • First major university (UB)
  • First railroad
  • Massive influx of immigrants
  • Vibrancy continues through century
the nation s largest cities
The Nation’s 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

Detroit

(#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

Pittsburgh

(#13) Buffalo

the nation s largest cities12
The Nation’s Largest Cities

1940

NYC

Chicago

Philadelphia

Detroit

Los Angeles

Cleveland

Baltimore

St. Louis

Boston

Pittsburgh

(#14) Buffalo

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

1950

NYC

Chicago

Philadelphia

Los Angeles

Detroit

Baltimore

Cleveland

St. Louis

Washington DC

Boston

(#15) Buffalo

the nation s largest cities13
The Nation’s Largest Cities

1980

NYC

Chicago

Los Angeles

Philadelphia

Houston

Detroit

Dallas

San Diego

Phoenix

Baltimore

(#39) Buffalo

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

2005

NYC

Los Angeles

Chicago

Houston

Philadelphia

Phoenix

San Antonio

San Diego

Dallas

San Jose

(#66) Buffalo

buffalo s economic history
Buffalo’s Economic History
  • Built on manufacturing
  • “Production economy”
    • Grain distribution
    • Aircraft (1920s)
    • Automobile (1900-20s)
    • Power
    • Lumber
    • Chemical Industry (1920s )
    • Steel
bethlehem steel
Bethlehem Steel
  • Acquires Lackawanna Steel in 1922
  • By 1940s, is world’s largest
  • Employs 20,000 through 1960s
  • Reduction begins in 1970s
  • Steel-making ended in 1982
  • Plant closes in 1983
changing economic character
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
changing economic character18
Changing Economic Character
  • Dependence grows
  • Diversification declines
  • Founding industries gone by 1950s
  • St. Lawrence Seaway (1960s)*
  • Growth of Buffalo’s suburbs
  • UB North Campus
  • Bethlehem Steel closes
buffalo s economy today
Buffalo’s Economy Today

Largest Employers:

State Government

Federal Government

Tops Markets

Erie County Government

Buffalo City School District

UB

Kaleida Health

M&T Bank

HSBC Bank USA

Catholic Health System

the economic toll
The Economic Toll
  • Lack of economic growth
  • Rapidly declining population base
  • Poverty concentrations
  • Decaying tax base
  • High unemployment rates
  • Suburbanization of wealth
buffalo s control board
Buffalo’s 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)
historical context of control board
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
state comptroller s report
State Comptroller’s Report
  • Long-term economic weakness
  • Population decline
  • Structural budget deficit
  • Growth in budget gaps
a look at buffalo s budget
A Look at Buffalo’s 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
state comptroller s report continued
State Comptroller’s Report (continued)
  • Projected growth in budget gaps (up to $50 million in 2004 if problems weren’t addressed)
  • First to recommend a control board: Buffalo Oversight and Recovery Board
  • Legislature takes findings, negotiates bill w/ Governor creating Board
the control board
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
control board powers
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
how the financial plan works
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
how the financial plan works29
How the Financial Plan Works
  • New actions with recurring value
  • Narrow (and eventually close) structural budget gap
  • Deficit borrowing
    • “Easing” the City’s way to budget balance
    • Avoiding draconian budget/service cuts
what s next for buffalo
What’s 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 Buffalo’s assets? Liabilities?
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