BIG BUSINESS COUP
Banks seize Buffalo
By Beverly Hiestand
Buffalo, N.Y.
In a sweeping takeover, big business has
seized the economic and political reins of the economy of this
Great Lakes city.
In July, Gov. George Pataki and the New York State
legislature approved a Buffalo Fiscal Stability Authority,
which will have the most sweeping financial oversight powers in
state history. The institution of this board followed an
announcement on June 18 that the city of Buffalo's credit
rating sank to just one level above junk bond status.
The city has been in dire straits, bordering on bankruptcy
and unable to guarantee from week to week that it can pay its
employees and meet other financial obligations.
The 270,000 city dwellers are economically devastated. The
city has lost half its population over the past 50 years. Most
large industries, including the huge Bethlehem Steel mills,
closed long ago. The local job market, in its third year of
decline, is still weakening. The unemployment rate in Buffalo
is 9.6 percent. Teen agers face the worst summer job market in
nearly 40 years.
About 38 percent of Buffalo is officially poor; 39 percent
of children here are living in poverty--the sixth-highest rate
among U.S. cities with a population above 100,000. (Children's
Defense Fund) Nearly 57 percent of Latino children here are
growing up poor--double the overall U.S. rate and the highest
among the country's 244 largest cities. (Buffalo News, June
28)
The Buffalo financial crisis is not an isolated phenomenon.
It's part of the widening capitalist crisis. State and
municipal budget crises are deepening in the wake of huge tax
giveaways to the wealthy, passed by both the Republican and
Democratic parties. The states are pushing the cuts and costs
down to the cities and towns
Buffalo is a microcosm of this larger economic problem and
of the capitalist "solution" to this crisis.
The economic hard times are not the fault of workers and
oppressed communities. But that is who will be burdened with
the heavy consequences of what the financial board will bring:
service cuts, layoffs and wage freezes.
Slated to hold its first meeting in mid-July, the financial
control board will begin making recommendations to balance the
budget on the backs of those who can least afford it, in order
to close what authorities have projected could be a $10-15
million deficit this year.
The board will have the authority to borrow money and order
spending cuts, and the power to override or approve union
contracts, freeze payrolls and intervene in binding arbitration
proceedings.
At least for now, this capitalist clique may rely on what
are known as "salami tactics," slicing away at hard-won wage
and benefit packages rather than chopping up entire contracts.
But it could awaken militant resistance from the labor
movement.
Health care benefits won by municipal workers in their union
contract are in jeopardy. Pensions for retirees are also
endangered.
This financial board brings an intensification of racism,
capitalist exploitation and the class dictatorship of bankers
and business kingpins over the working and oppressed of
Buffalo.
And the word dictatorship is no exaggeration.
'Ominous and threatening'
Normally, the wealthy owning class rules through the
two-party system. But this millionaire cabal has taken a
hands-on approach, superceding the powers of elected
officials.
And Democrats and Republicans alike--from the State Capitol
to City Hall--allowed this "coup" in order to get out of the
firing line for the economic crisis.
The people of Buffalo have been disenfranchised. Elections
will be a charade as long as the control board has such powers.
Those who manage the economy will have the power to manage
politics.
The board will be able to impose its own financial plan if
it rejects the city's proposal and city officials fail to make
acceptable revisions. The June 25 Buffalo News reported that
some politicians were stunned to learn that the board will also
have the clout to remove from office any city official who
refuses to comply with the financial plan. Offenders could even
be charged with misdemeanor crimes.
The board will profit and make money from its power, all off
the backs of the workers and their communities. Buffalo had
been, in reality, in default and therefore could not borrow
money. But the board will be able to get short-term loans from
the bankers, who are assured that their debt payments will be
squeezed out of the workers and oppressed communities. And
since short-term loans guarantee higher interest rates, the
banks are assured a nice piece of change in return.
Former State Comptroller H. Carl McCall, an African
American, held six separate meetings with more than 20
community leaders and representatives from nine city unions, in
which some labor leaders reportedly voiced growing fears that
the powers of the board are too broad. Their fears were
confirmed when the administration of Buffalo Mayor Anthony
Masiello announced that the control board should focus on three
problems--a declining property tax levy, "out-of-control"
health insurance costs and rising costs for employee pensions.
(Buffalo News, July 9)
Council President James W. Pitts, also African American,
described the control board's broad powers as "ominous and
threatening" and added, "They are playing with fire." Pitts
said he believes unions across the state will mount court
challenges to overturn the legislation.
Meet the control board
Nine members have been appointed to the board by Gov.
Pataki.
Thomas Baker, the appointed chairperson, was with the Wall
Street accounting firm of Price Waterhouse for 33 years. Baker
is director of the Oishei Found-ation, established by the
founder of the Trico Products Corp. to supposedly improve
quality of life through cultural, social, civic and other
charitable contributions. However, quality of life for
thousands of Trico workers and their families greatly
deteriorated more than a decade ago when the company moved its
plants to Mexico to maximize profits by paying workers very low
wages.
Robert Wilmers, president and chief executive officer of
M&T Bank, rakes in more than $1 million a year in salary
and bonuses. With 988,000 stock options he has accumulated over
the years, however, he was sitting on more than $56 million in
profits at the end of last year. And those options could be
worth another $10 million this year. (Buffalo News, June
15)
Alair Townsend, the only woman on the board, will serve as
vice chair. She is the former New York City budget director and
deputy mayor in the Koch administration during the years of
control board oversight there. She is the current publisher of
the weekly newspaper Crain's New York Business and is known as
a "fiscal conservative" who champions business causes. She
advocates smaller state budgets and corporate tax breaks. She's
an enemy of municipal unions and has also condemned teachers'
unions for trying to stop attacks on public education and
teacher tenure protection. (Buffalo News, July 14)
Erie County Executive Joel Giambra is a controversial
appointee to many in this city. He has been working with
business to implement a merger of city and county services,
called "regionalization." Many here, especially in the African
American community, which constitutes 50 percent of the
population, are concerned that this really means
disenfranchisement. For years Buffalo has been suffering from
white flight to the suburbs. According to the July 7 Buffalo
News, Giambra and his business allies wielded significant
influence in guiding Pataki's appointments.
Completing the panel are Ronald Pirtle, president of Delphi
Harrison Thermal System in Lockport; former New York State
Comptroller H. Carl McCall; John Faso, former State Assembly
minority leader and also known to be a fiscal conservative;
Buffalo Mayor Anthony Masi ello, and one member yet to be
appointed by the State Senate majority leader, State Assembly
leader and Assembly speaker.
While it has been suggested that this seat be filled by a
union representative, so far no labor leader has reportedly
been willing to sit on this board.
The selection of the board was influenced by area business
figures, who directly lobbied the governor's office and
legislators.
Wilmers appeared to direct many of the talks with top
lawmakers, according to legislators, and helped negotiate the
final legislation. Also involved in the talks were Mark
Hamister, current Buffalo Niagara Partnership head--who gained
his wealth by building a nursing home empire--and Partnership
President Andrew Rudnick. (Buffalo News, July 3)
Resist!
How do the people of Buffalo feel about who should run this
board? A poll conducted for the Buffalo News found that only 24
percent favored business leaders; just 15 percent supported the
idea of elected officials.
But 41 percent of those polled thought the control board
should be dominated by ordinary individuals and grassroots
community action groups. (Buffalo News, July 3)
African American syndicated columnist Ron Watson wrote on
July 10: "My worry is that this control board consists of
people who'll never need the services that inevitably will be
cut. This is the panel that will decide how many firefighters
the city should have. But how many live in tinderbox wood-frame
houses so close together they can ignite one another? This is a
panel that recognizes the importance of Shea's Performing Arts
Center and the Buffalo Philharmonic Orchestra. But how many are
regulars at the Langston Hughes Institute or the
African-American Cultural Center, or have kids who rely on
programs at a center like that?"
The intent of a big-business-controlled board was already
beginning to be publicly questioned in June at a series of town
meetings. More than 1,500 Buffalonians turned out to argue and
debate the wisdom of a control board.
Myra Holiday, an African American union activist, asked
politicians and potential board members, "What are you going to
do to help working families?"
Referring to shifts in population from the city to the
suburbs, Elizabeth Berry, founder of Save Our Libraries,
argued, "I've heard enough about money, money, money, fiscal
this, fiscal that. If you take care of our neighborhoods, they
will come. If you cut services, they will go."
Joseph Foley, president of the Buffalo Professional
Firefighters Local 282--a union that has been in negotiations
with the city for the last four months--stated, "Are you
telling me a guy making almost $10 million a year really knows
what I do for a living?"
What is needed is an independent coalition of
labor/community forces to begin to prepare to resist this
attack on the quality of life of people in this city.
A legal challenge being initiated by an alliance of unions
is a good start.
Philip Rumore, president of the Buffalo Teachers Federation,
said that his union will be willing to take whatever legal or
other actions are required to oppose any further actions
detrimental to teachers. The Buffalo Board of Education has
just cut 679 jobs, including 413 teaching positions.
The BTF vowed to file a federal lawsuit within a month
arguing that any effort by the board to modify contracts would
violate the U.S. Constitution.
Concerns about the control board reportedly dominated
discussions during a four-day statewide convention of fire
fighters in Buffalo.
"It would seem to be the easy way out for every municipality
falling on hard times," said Charles Morello, president of the
New York State Fire Fighters Association, largest in the
country. "Turn it over to a group of executives, do away with
services, and send us all back to the Stone Age. It seems to me
like these guys should be concentrating on finding people work,
not micromanaging city finances."
Weeks before the board was formally created, the
International Action Center in Buffalo widely distributing a
leaflet that warned the board will attempt a huge transfer of
money to the banks at the expense of the working class and
oppressed. "These are the same billionaires who have just
gotten richer with Bush's huge tax cuts and the bounty of
post-war contracts in Afghanistan and Iraq," it read.
The leaflet stressed that no unions or union workers should
face economic threat and that no decent-paying jobs should be
destroyed. It concluded that the wealth created by working
people must be put into city schools and social services, not
given to the banks for debt service.
The IAC presented these demands at public hearings held in
Buffalo and called for a moratorium on the city's debt. This
immediate demand was well received by those who packed the
hearings.
Reprinted from the July 24, 2003, issue of
Workers World newspaper
This article is copyright under a Creative
Commons License.
Workers World, 55 W. 17 St., NY, NY 10011
Email: ww@workers.org
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