It may not be perfect, but Niagara Falls Mayor Paul Dyster believes a $13.45 million bailout package for the city, courtesy of a Cuomo-engineered acceleration of Power Authority aid, announced last Friday, will help the city through its current budget crisis as it awaits the outcome of the gaming dispute arbitration between the state and the Seneca Nation.
“We were looking at something relatively unique,” the mayor told the Reporter on Monday night as he prepares for tonight’s public hearing on the budget at 7 p.m. “The state is in arbitration on the gaming issue, the legislature is not in session, and there was economic damage from Hurricane Sandy. We were looking for a creative way to get cash quickly, and not set a precedent,” adding that he believes the NYPA spin-up does just that.
Dyster acknowledges that the spin-up calculation was reached using 2005 discount rates, under NYPA terms, and that amounts to $13.45 million, not the estimated $35 million value of the acceleration in today’s rates. But he says the bailout plan, with details still being worked out, would allow the city to repay the spin up once it starts receiving casino revenue again from the Seneca Nation after the arbitration is completed and continue to receive the annual $850,000 payments from NYPA for the next 44 years under the terms of the NYPA relicensing agreement.
Dyster said the agreement will allow flexibility in restoring jobs and reducing the tax increase proposed in his disaster budget while the arbitration between the Seneca Nation and the state proceeds.
The mayor said he and fellow leaders were working with the state to find a creative solution to the immediate issues facing the city, many of them the result of the upwards of $58 million withheld by the Seneca Nation to the state for Niagara Falls as a host casino city. That puts Niagara Falls in a different category from other municipalities across the state that are experiencing budget difficulties not exacerbated by the gaming dispute affecting payments to the Cataract City.
Gov. Cuomo said last Friday that with the city in a financial crisis because of the Seneca Nation’s failure to pay the money due under the compact, “the state is stepping up to provide fiscal stability, minimize layoffs and ensure that essential services continue.”
But some city lawmakers question the wisdom of taking the NYPA bailout, and that will certainly come up for discussion at tonight’s public hearing at City Hall on the disaster budget plan submitted previously by Mayor Dyster, before the NYPA announcement, that proposes an 8.3 percent property tax hike and 19 layoffs to help close the deficit.
“We’ve already cut enough to save jobs and avoid the tax increase,” said Council Member Glenn Choolokian who has been wielding the carving knife on the mayor’s spending plan with Council Chairman Sam Fruscione and Council Member Bob Anderson. “We have a lot of questions about the NYPA bailout, and the chairman and I are going to meet with Mayor Dyster on Wednesday to try and get answers before we go ahead with anything.”
The mayor said on Monday night he hopes to meet with Chairman Fruscione before tonight’s session begins in earnest to go briefly go over the NYPA plan.
The NYPA bailout accelerates payments to the city under the 2007 relicensing agreement, converting an $850,000 annual payment stream to the city over the next 44 years into an equivalently valued lump-sum amount of approximately $13.45 million. According to NYPA, once the arbitration process concludes and the city begins to receive casino revenue, it could then return the money to NYPA and continue receiving its annual payment of $845,000.
But that would assume a positive outcome for the state and city from the arbitration, and it might not go quite go that way given the bitter history of the gaming fight and the enormous amount of revenue at stake for all the parties.
No decision is expected before early next year from the arbitration panel. If the state were to lose the arbitration, there is no telling what will happen to the City of Niagara Falls and the money it is owed from the casino pact.
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