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India Walton’s Uphill Battle

On the fiscal challenges facing Buffalo’s potential next mayor India Walton celebrates her victory in the 2021 Democratic primary. | WKBW TV

During a television interview with Buffalo’s WGRZ 2, India Walton, the city’s Democratic mayoral nominee, was asked by an incredulous reporter how she would pay for her policies. Her response was frank. “You just take the money and put it where it goes,” Walton said. “It’s our money. It belongs in the pockets of the workers, and in communities, in neighborhoods that have long been left behind.”

When Walton, a thirty-eight-year-old former nurse, democratic socialist, and housing activist, became Buffalo’s Democratic nominee for mayor in June, she was put in a more challenging position than the country’s other leftist standard-bearers. Unlike Congresswoman Alexandria Ocasio-Cortez or the handful of socialist city council members and senators downstate, Walton will have to manage a budget. And as any big city mayor in America will attest, this has only gotten more difficult in recent years.

As federal and state governments have disinvested in cities, mayors have often used perilous and predatory strategies to balance their finances. Unlike the federal government, states and cities are typically legally required to keep a balanced budget, which means they’re on the hook for raising large chunks of revenue. In order to do so, cities like Buffalo have courted private developers with tax giveaways to build more housing, embraced outsize tax breaks to lure large corporations, and expanded the carceral system to rake in money from fees and fines. These approaches have been much less successful in practice than on paper, making developers wealthier and subsidizing police salaries in exchange for crumbs in the city’s coffers.

The federal government has sidestepped investing in housing for decades, and many states diminished aid to cities after the great recession, even as their economies recovered. Cities have refused to embrace politically unsavory taxes to compensate. A Walton administration would attempt to forge a different path, but like all big city leaders, she may not have much flexibility to do so. (The Walton campaign declined to make the candidate available to interview for this article, citing their desire to focus on Buffalo-based media outlets.)

Buffalo is similar to other cities in America’s rust belt, where deindustrialization led to job loss and a population exodus. But in some ways it is unique: the city’s largest revenue source is state and federal aid, which together make up around 49 percent of money taken in. Many of the city’s social services are funded from this pot.

Only 37 percent of the city’s finances are self-generated. But the largest self-generated revenue is from property taxes, which Mayor Byron Brown has kept more or less steady for sixteen years to appease real estate interests. Without significantly increasing property tax revenue, Brown drew down on $100 million of the city’s reserves over his time in office.

It’s not certain that Walton will win the general election contest against Brown, who is waging an ugly campaign after ignoring her during the primary. Brown’s jockeying for an Independent ballot line was shut down by judges, but he still holds significant support in the city.[*]

If Walton does triumph, she will have significant federal stimulus money to fund parts of her agenda. Buffalo is set to receive $350 million in this year’s American Rescue Plan, equivalent to roughly 65 percent of the city’s annual budget. That money should last a few years, and Walton has not committed to running for a second term. But she has few other options to raise revenue, and she wants her proposals to be sustainable, something hard to do if some federal investments don’t become permanent. The Walton campaign told me they are open? to raising property taxes, but every local government in New York is bound by a property tax cap, enacted by former governor Andrew Cuomo, which allows only 2 percent increases per year. (During his time in office, Brown raised this tax only once.)

Walton’s agenda faces another fiscal challenge: she wants to relinquish some revenue from traffic tickets. She has been outspoken on Buffalo’s fine and fee regime and opposed new school zone speed cameras that were set to roll out this year. “If you want to raise revenue, create jobs. Do things other than ticketing, fining, and making us pay for the failures of city government,” Walton said at a Common Council meeting in April.

Her comments allude to the larger crisis of predatory fees enacted by local governments across the country. Criminal and civil fines spiked after the 2008 economic crisis when many cities lost revenue. Even when most states recovered or surpassed their 2008 revenue, spending cuts on social services in many cities were not reinstated, and state aid decreased in cities across the country. As a result, forty-eight states have expanded their use of fines and fees in both criminal and civil court to balance budgets since then. In New York state, half of all cities increased fines between 2010 and 2017 by a median of 25 percent. The harmful effect of such fines became apparent to many Americans when the Justice Department released its report on Ferguson, Missouri, in 2015, following the killing of Michael Brown. The report found that “Ferguson’s law enforcement practices are shaped by the City’s focus on revenue rather than by public safety needs.”

The full cost of Buffalo’s traffic fees is unknown, as no one has tabulated jobs lost by people unable to drive to work, or money spent arresting people who drive with suspended licenses.

In Buffalo, tickets and fees swelled under the Brown mayoralty. Between 2006 and 2012, the seven-year average number of tickets disbursed in Buffalo was about seventeen thousand. Between 2013 and 2019, the average number of tickets was forty-two thousand per year, a 241 percent increase, according to data from the Partnership for Public Good. In 2015, a law was passed that allowed the city to keep revenue from tickets rather than pass it to the state. That same year, the city established a new agency, the Buffalo Traffic Violations Agency, to collect these tickets. Revenue from non-criminal traffic tickets jumped from $500,000 a year to $2.8 million a year after the agency was established. Due to non-payment of fees, the city’s license suspensions also more than tripled in the course of a year, forcing people to risk driving with a suspended license, a misdemeanor.

Two years before the BTVA was formed, the Buffalo Police Department formed a division called “Strikeforce” meant to combat gangs. The force set up traffic stops, issuing low-level tickets to justify car searches. These tickets had virtually nothing to do with public safety. According to data obtained by The Investigative Post, in one week in 2017, “police issued 386 tickets for tinted windows and seized only one gun and confiscated narcotics five times.” And according to a class action lawsuit filed in 2018, 85 percent of traffic stops were in Black and Latino neighborhoods. Saying the quiet part very loud, one Council member compared ticket revenue to “mining for gold.”

But the revenue did not fix the city’s budget problems. In 2017–2018, revenue from tickets was about $2.8 million. Over the same period, $788,000 went to operating the BTVA. The net $2 million did not come close to matching other increases in the budget: specifically police spending. From 2006 to 2020, Buffalo’s police spending increased from $93 million to $146 million, reaching a third of the city’s overall spending, which was $535 million in the 2021–2022 adopted budget. To fund this increase, the city slowed down funding to other agencies so that they were no longer keeping pace with inflation. According to a report from Partnership for the Public Good’s Colleen Kristich, “other city departments have been effectively defunded—as revenue has been directed into the police department at their expense.”

“It’s not really clear that it’s exactly lucrative or going to any purpose other than propping up a bloated police budget,” Kristich said of tickets by phone.

Despite the ballooning police budget, Walton has deliberately refused to use the term “defund” to describe her approach to policing, viewing it as politically toxic. She has, however, adopted some of the objectives of the defund movement, saying she would move responsibility for non-criminal issues, such as mental health calls and traffic violations, to other departments to better allow police to deal with crime. But only 30 percent of police time is spent dealing with crimes, which raises the question of where the remaining police resources would go if their responsibilities are diminished.

The campaign declined to say whether police spending would be reduced, leaving the window open to move officers between agencies to handle non-criminal issues. Jesse Myerson, spokesperson for the Walton campaign, said this process would be built from the bottom up with community input. This makes sense, but given the outsize growth of the city’s police budget, it seems impossible for Walton to accomplish any kind of budget equity without freeing up some of these funds.

The campaign believes any budget hole from reduced ticketing and fees would plug itself through revenue from sales taxes that can be raised when the city’s poorest citizens are able to spend money on things they need rather than being burdened by fines. And there is some evidence that predatory fines may not even be effective at raising revenue for many cities. A comprehensive Brennan Center report of ten jurisdictions across the country found that spending on collection of criminal fines and fees often offset the revenue they brought in. The full cost of Buffalo’s traffic fees is unknown, as no one has tabulated jobs lost by people unable to drive to work, or money spent arresting people who drive with suspended licenses.

Many cities have made big gambles to shore up their housing stock to adjust for federal disinvestment, courting developers with tax breaks and allowing luxury housing to be built in poor and working class neighborhoods. Buffalo’s use of tax breaks has been particularly egregious, spurring property values, raising rent, and shifting tax burdens from developers to new homeowners.

In 2002, New York’s state legislature passed a tax break called 485-a which allows developers to avoid property taxes for twelve years if they convert unused non-residential buildings into housing. There’s no requirement that developers build affordable units to qualify for the tax breaks. Buffalo opted into the program in 2002, handing over millions of dollars in lost revenue to subsidize luxury housing. According to a report from the Public Accountability Initiative, the city spent $63.5 million to subsidize luxury housing over the course of twelve years. Among the highest-paid beneficiaries of the tax break was former gubernatorial candidate and Trump supporter Carl Paladino, whose Ellicott Development received $9.5 million worth of exemptions. (Paladino aggressively disapproves of Walton’s nomination, and offered to fund Byron Brown’s campaign in the general, although Brown has publicly disavowed Paladino’s support.)

Even the most enthusiastic supporters of supply-side housing theory—which holds that any new housing will decrease overall rents by increasing supply—would have trouble proving their case in Buffalo. Rents have increased in the nineteen years since 485-a went into effect, and the vast majority of new housing built under the program rented for well above $799 for a two-bedroom, HUD’s fair market rate for the area.

Walton favors repealing 485-a. When asked whether Walton would advocate for full repeal at the state level or whether she would advocate for Buffalo to opt out of the tax break, the campaign told me she would pursue both strategies. Her platform does not meaningfully address housing supply and focuses instead on shoring up protections for existing renters by nudging the city toward rent stabilization under 2019’s Housing Stability and Tenant Protection Act. While she does want to build more housing under community control, resistant to speculation through community land trusts built on city-owned vacant lots, it’s unlikely the state’s meager funding for this model will suffice.

And of course, Walton will likely have to wrestle with perhaps the most disastrous economic development project in the state’s history: Andrew Cuomo’s Buffalo Billion project. Presented as a billion dollar investment by the state into Western New York, the procurement process was deeply corrupt and the program’s architect, Alain Kaloyeros, landed in prison. The plan included a $750 million solar panel plant—later acquired by Elon Musk’s Tesla, Inc.—that had created just eight hundred jobs as of 2018, a cost of nearly $1 million per job. A subsequent smaller program dubbed “Buffalo Billion II,” was more successful, focusing on retail and transit hub revitalizations.

Even the most enthusiastic supporters of supply-side housing theory would have trouble proving their case in Buffalo.

Many big city electeds view these boundless tax giveaways to large corporations as a necessity, a way to compete with other cities as they race to the bottom to see how much tax revenue they can pass up. City leaders don’t bother forging strong collective bargaining agreements, a necessity to ensure meaningful local hiring for “job creation” projects such as these. But Walton’s campaign told me they fundamentally disagree with the premise that these tax giveaways are necessary to plug the city’s budget holes. “The rationale that cities use, that if they do these tax breaks, that will increase the tax base, I think we really haven’t seen that,” said Myerson.

According to data compiled by Good Jobs First, a non-profit that tracks tax incentive programs, Buffalo spent $26.6 million on tax incentives in 2020 and has recouped only $8.4 million of that money to date. Samuel Stein, author of Capital City: Gentrification and the Real Estate State, agreed that these top-down economic development models often ask cities to give up more than they should to compete over a corporate presence. “You have to be big enough to attract the industrialists but also generous enough to hand over lots of public resources,” he says.

To avoid these dangerous sources of revenue, the Walton campaign told me it will advocate for the state to take a greater share of the tax burden. “I think there’s some hope that the state would be able to contribute more,” Myerson said. The campaign is also hoping that a more friendly state government headed by Governor Kathy Hochul, a Buffalo native, as well as the Democratic supermajority in the state legislature, could lead to changes in the state’s property tax law, freeing up another revenue source.

And they want the federal government to chip in even more to support Buffalo’s budget, insisting some pandemic subsidies should be more long-term. “The federal government has the most budgetary flexibility of any entity on earth, actually, and can run a deficit as big as it likes,” Myerson said. “I’m hoping it will become a more permanent solution.” This is of course out of Walton’s control. But mayors of big cities can be more vocal about disinvestment and the harmful consequences as they advocate for more aid.

In preparation for what could be a nasty general election fight against Byron Brown, Walton is wisely shifting away from the national spotlight that shone on her in June and focusing on Buffalo residents. But she has not been shy about trying to usher in more progressive victories off the strength of her own win, especially in Western New York. “This isn’t about making India Walton mayor of Buffalo, this is about building the infrastructure to challenge every damn seat,” she said at her victory speech after clinching the democratic nomination in June.

Some caution that expectations are already too high, as Walton is limited by the whims of the Common Council, by the state of New York, and the aforementioned limits in her revenue powers. But if she wins the general election and makes real inroads on her agenda, it will be a test for a less extractive form of economic development, based on freeing up the wallets of poor and working-class people and withholding tax credits for large developers and real estate. Such a deliberately slow, inclusive and community-oriented approach would be difficult to prove successful in the short-term.

“The socialist label makes people think this is going to be more dramatic than it is. She is just a human being,” says Paul Zarembka, an economist who teaches Marxist theory and labor history at the University at Buffalo. Zarembka says that Walton could improve the lives of her constituents in big ways on small issues: low-level parking tickets, improved access to social services. “These small things could get quite a bit better for citizens of Buffalo,” he says, but “from the outsider’s point of view it won’t look that much different.”

However, it would be naive to assume that Walton’s fortunes in Buffalo are isolated and have no impact on the rest of the country, particularly on cities that have also seen manufacturing jobs trickle out over decades and have balanced their books on the backs of poorer residents. “If she can chart a course on housing, that would show a lot of other cities, NYC included, that a different way is possible,” Stein says. “I would love to see this as the development of a blueprint.”

The real test is whether people in Buffalo and across the country are swayed by Walton’s theory of economic power. On this, Walton is hopeful. “I think that the country as a whole is waking up to the fact that when the least of us does well, then we all do better,” she told Rolling Stonein an interview. “The status quo is no longer acceptable.”

[*] This paragraph has been updated to indicate that a previous ruling allowing Byron Brown’s name to appear on the November ballot has since been overturned by a New York State appellate court and the U.S. Court of Appeals for the Second Circuit.