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City facing tough choices on disaster budget

By Tony Farina

Mayor Paul Dyster says, “Everything
is on the table.”
City Controller Maria Brown has her
work cut out for her.
Councilman Glenn Choolokian says
the mayor “Spent like a drunken
sailor”and the people are left to pay.

Barring a miracle and none are in the forecast, the City of Niagara Falls is in “disaster budget” mode, according to the Mayor Paul Dyster and “everything is on the table” when he presents his budget to nervous city lawmakers on Monday, after which they will have 30 days to figure out what stays and what goes in order to try and balance a budget with an expected deficit, or structural imbalance, of about $7 million.

So what is a structural imbalance? Simply stated, the city expects to take in $78 million in revenues and has expenses totaling $88 million. According to City Controller Maria Brown, city departments have responded to the challenge, and by her estimates the pre-budget gap has been reduced to less than $7 million, but that’s still in the “disaster” category and means that “everything will be on the table,” according to Dyster.

The city is facing rising costs on everything from gasoline to health care costs and has lost revenues, including about $60 million in casino-driven payments from the state since 2009. The city has also lost two grants, one to the police department and one to fire, and $600,000 from a PILOT on a commercial project. To make matters worse, the city has burned through its reserves over the last three years to cover the shortfall from the casino money, and has nothing left in the rainy day fund.

Despite the chilling numbers and the mayor’s forecast of a “disaster” budget, City Councilmember Glenn Choolokian says, “nobody is telling us anything like that,” and laments that he and his fellow lawmakers have not been kept in the loop on the looming budget crisis.

“The mayor hasn’t really touched base,” Choolokian said, and of the looming disaster budget, the lawmaker said he hasn’t really detected a sense of urgency coming from the administration, calling preparations a “secret process” that hasn’t included lawmakers.

And Choolokian has strong words for the Dyster administration, saying both Dyster and previous Mayor Vince Anello blew through the money in a lack of fiscal responsibility that has created the current situation, notwithstanding the dispute over gaming money.

“We’ve been spending like drunken sailors, whether for Hard Rock concerts or the Holiday Market, or whatever,” he said. “They just kept spending, and people get the idea that whatever you want to do, go to Niagara Falls and they will pay for your project.”

Choolokian and other council members will have 30 days to examine the budget once it is received on Monday, and Choolokian promises a line-by-line review of the spending plan. As for specifics, like possibly raising taxes by 2 percent that would bring in about $1.2 million or layoffs and spending cuts, he said “I can’t comment on something I haven’t seen.”
The city has not had any major layoffs since 2001.

Even if it received the casino revenues, the city is restricted on how it can spend that money, and 25 percent of it would go to the hospital, school district, NFTA, NTCC, the Underground Railroad Project, and a portion for roads. The rest has to be used for economic development. The city gave the new NCCC Culinary Institute $2.5 million last year, but it can’t use casino money for salaries and operating costs.

One potential source of gaining money to balance the budget would be to renegotiate or end the $3.1 million the city gives to USA Niagara, a subsidiary of Empire State Development. The local agency heading the governor’s regional development efforts, hasn’t responded to our Freedom-of-Information request on its spending.

While the mayor has said everything is on the table, he enjoys a close relationship with USA Niagara and its business network and would probably resist cutting ties, even as the city faces serious operating deficits that could trigger layoffs, a tax hike, and more.

Another option for city lawmakers is to increase the sales tax, which last year brought in $8 million, even with the population down. But you can rest assured that tax increases of any kind are the last resort for elected public officials who want to keep their jobs. But with a $7 million hole, it will take a lot of maneuvering to avoid the need to boost revenues.

David Kinney, the city’s Director of Public Works, conceded over the weekend, “I’m sure [the disaster budget] will have an effect on me, but it is in the hands of the mayor and the city administrator and it comes down to service. What services are they willing to keep or curtail? We’ll know more on Monday, but obviously I don’t want to see anything cut. All our services (streets, parks, buildings) are vital assets to the City of Niagara Falls. But I’m also realistic and I know something has to happen.”

While the city prepares to face a disaster budget, at least in part created by the gaming dispute between the state and the Seneca Nation, a three-person panel has been selected to arbitrate the impasse over whether the state has violated its compact with the Senecas by opening casinos and three local racetracks. The Senecas claim the lucrative state casinos violate the exclusivity terms of the compact and have withheld payments to the state called for under the agreement since 2009, revenue that would have then been returned to the host communities of Niagara Falls, Buffalo, and Salamanca.

The panel is expected to have a preliminary meeting early next month, but no miracle is likely in time to spare Niagara Falls the budget crisis it is about to begin. The council must return the plan to the mayor by Nov. 1 who then has 10 days to veto anything the council has done. It would take four votes to override a mayoral veto.

 

 

Niagara Falls Reporter www.niagarafallsreporter.com Sep 25 , 2012