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Troubled US Rust Belt City Works to Reverse its Fortunes - 2004-09-01


The term "Rust Belt" describes a string of old, northeast U.S. cities like Cleveland and Youngstown and Pittsburgh that were once industrial powerhouses. Large parts of these cities have literally rusted, lost those industries and thousands of people. Some of them are teetering on the edge of economic collapse. In Buffalo - a classic Rust Belt City - things are so grim that New York State has taken control of the finances.

You won't hear industrial sounds around troubled Buffalo these days - not since giant Bethlehem Steel, which once employed 22,000 people, closed its furnaces in the 1980s and went bankrupt. Once the bustling gateway to Great Lakes shipping, Buffalo slid from a blue-collar buzzsaw of 533,000 people in 1960 to a partly empty place with half as many people today. Even adding the suburbs, the Buffalo area has endured the nation's steepest population decline.

If you squint your eyes and look out Tom Baker's window, high in the tallest downtown building, you can picture Chicago's magnificent lakefront of parks, museums and Gold Coast condominiums

But this is Buffalo, not Chicago. What you really see along Lake Erie are empty steel mills, rusting lake freighters, and abandoned grain elevators.

Mr. Baker is the president of a philanthropic foundation. But a year ago he got a tougher part-time job - an unpaid one at that - when he was named chairman of the Fiscal Stability Authority. That's the control board that the State of New York imposed on struggling Buffalo.

?We've been referred to as the 'Control Freak Board' by at least one of the local politicians,? Mr. Baker says.

Buffalo has lost more than one billion dollars of its tax base in the past 10 years. Yet it's locked into long-term, expensive labor contracts with police, firefighters, and teachers.

Only a series of bail-out payments from the state legislature in Albany kept Buffalo solvent. Even the control board has had to borrow short-term money, just to keep the schools open. It has frozen wages and trimmed payrolls where it can. Skinnying government, Tom Baker calls it.

?There's a great desire to retain the status quo,? he says. ?I often refer to it as the 'comfort blanket.' You know, the kids and their little blankey. Everything is a fight. Every issue is a fight. People often say, 'Why don't we let the city go bankrupt? That'll take care of it, and we can eliminate all those onerous union contracts. Truth of the matter is, there's no silver bullet [magic pill] for this. People are coming to grips with the fact that we're here, we're gonna stay, and we're gonna continue to do what it takes to make a difference.?

A New York court made the daunting task of skinnying Buffalo government even tougher in August when it ruled the control board had no right to freeze Buffalo police officers' salaries.

In a sense, say its critics, Buffalo deserves what it's getting. Economist and author Larry Southwick, a former councilman in suburban Amherst, for instance, says Buffalo's mayor and council have been, in his words, in thrall to the unions, signing sweetheart contracts and handing out patronage jobs like sugar plums.

?You look at the nepotism in Buffalo - the waste,? he says. ?Why was it, in the Buffalo schools, that when the number of pupils went down, basically the number of teachers remained constant, and the number of administrators went up??

Larry Southwick says there's an ominous problem that no reformer, no control board, and no magic wand can fix.

?Our young people - the people from 25 to 45, say - are the ones missing,? he says. ?And their children aren't going to be raised here.?

For many years, Richard Dietz has been analyzing the economy of western New York for the national bank, called the Federal Reserve, at its Buffalo branch.

?One of the most significant reasons to locate in one area versus another is where the population is growing - where the population wants to be,? he says. ?And that center is shifting to the South and West. If you have a decent job and you live in this area, it's a cheap place to live. It's not very crowded. You can get around. You can have a very nice standard of living in a place like this. But if you've been laid off from your job, and you're trying to find another one in an area that's not growing, those are the people who are apprehensive. Obviously it's a significant component of the population. And if those people are able to find jobs again, they're probably not going to be able to make the kind of money they were making at their first jobs.?

Given all the gloom and doom, mayor of Buffalo is not the most appealing job title right now. State, not city, contracts govern most police, firefighters, and teacher contracts and benefits, so Anthony Masiello can't lay many people off to save money. Besides, the control board runs most of the money matters anyway. Little wonder Mayor Masiello is a straight-talking realist.

?We have too much government,? he says. ?We have a government. We have a system and model that's layered, that's bureaucratic, that's redundant. And if you want to be competitive, you want to keep your costs down, you want to provide new and better-quality services, you have to reduce and eliminate and consolidate."

By consolidate, he means folding old Buffalo into larger Erie County to create what some call a new regional city. A commission, chaired by the former president of the University of Buffalo, proposed the idea. But everyone agrees: getting suburban voters to absorb the social and economic burdens of the inner city will take some powerful convincing.

One thing's for sure. If Buffalo is to have a future, it won't be in industry, but in medical centers.

Among the few construction cranes active in troubled Buffalo are uptown, expanding a medical and research center that boasts some of the nation's most prestigious cancer hospitals. Optimists in town also hang some hope on new downtown loft housing and a lively nightclub strip on Chippewa Street; on dreams of a revitalized, Chicago-like waterfront; and on unspecified bounties that might accrue from being the northern gateway to Canada - America's biggest trading partner.

But Mayor Masiello put his finger on the biggest challenge - convincing prospective business investors to ignore New York State's high taxes, the fearsome winter weather, the prospect of retraining a largely older workforce. And, of course, the ghostly pall of all those empty mills.

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