State Comptroller Blasts Dyster, City for Sad Fiscal Irresponsibility

Niagara Falls City Hall attracts spendaholics. It's easy because they are only spending other people's money.

State Comptroller Tom DiNapoli

Elvis leaving the building

State Comptroller Thomas DiNapoli blasted the administration of Niagara Falls Mayor Paul Dyster on multiple counts of poor fiscal practice, which the report concludes may lead to insolvency for the city.
(View entire report here)

A top priority of the office of State Comptroller is to help local government officials manage government resources efficiently and, by so doing, provide accountability to taxpayers whose dollars are spent to support those operations.

The report notes that the Niagara Falls city budget for 2012 came in at $86.3 million and that, for 2013, the number was $81.4 million and, while the 2009 impasse between the state and the Seneca Nation of Indians that resulted in the state suspending payments to the city of as much as $20 million a year for “host community” is taken into consideration, it was nonetheless highly critical of the city’s use of general fund balances in order to make up the shortfall between expected revenue and what actually came in.

The report was also critical of the city’s Information Technology (IT) efforts, stating that – with over 500 computers in use by city employees – no central office or administrator has been created to oversee their use.

The audit covered a period from Jan. 1, 2009, to Jan. 9, 2013 – the past four years of the Dyster administration. Despite the fact that state Comptroller Thomas DiNapoli is a Democrat, he could hardly have been more critical of the way the city of Niagara Falls is run regardless of political affiliation.

According to the report, DiNapoli sought to discover whether Dyster and the City Council ensured that budgets were realistic and structurally balanced; whether City Comptroller Maria Brown was properly recording city financial activity and whether city officials were properly safeguarding the taxpayer’s IT assets.

DiNapoli’s audit found the city to be sorely lacking in each and every one of these areas.

“We found that the City has a pattern of structural budget deficits, meaning that recurring revenues were not sufficient to fund recurring expenditures. During our audit period the general fund’s annual budget gap averaged $12.4 million,” the report stated.

“One cause of this structural deficit was that casino moneys had not been received since 2008 (Dyster’s first year in office), yet the City continued to budget for these revenues. When the dispute between the State and the Nation first occurred in 2009, it might have been prudent for the city to maintain established service levels while anticipating that the dispute might be quickly settled. However, as the dispute dragged on without a resolution, the City should have removed these revenues from its budget in order to protect the City’s financial position,” it continued.

Dyster, however, had different ideas. He was busy throwing $654,000 of your hard earned tax dollars at the Hard Rock Café, a multinational corporation owned by the Seminole Nation of Indians that – except for in Niagara Falls – actually paid for the privilege of staging concerts in public areas around the country.

Rather than worrying about the city going broke, Dyster instead planned and executed the disastrous $481,000 “Holiday Market” that failed to draw flies downtown during the 2011 Christmas season.

More than a million dollars has been spent on the Underground Railroad Interpretive Center, a tourist attraction that has yet to reel in a single visitor.

There was the $825,000 handed out to the dilettantes and poseurs at the Niagara Arts and Cultural Center, where boiling beer is considered an art in the best tradition of don Stefano Magaddino, and millions handed out to “consultants” to perform “studies” on subjects as prosaic as whether or not the block that the mayor’s house sits on should be deemed an “historic district.”

All the while, the city continued to sink deeper into red ink, the report states.

“The city has funded these structural deficits by relying on ‘one-shots’ such as fund balance and surplus moneys remaining in the capital projects fund. This approach has negatively affected the general fund’s condition,” the comptroller’s office wrote.

According to the audit, the city began 2009 with unassigned fund balance totaling $16.4 million in the general fund, and Controller Maria Brown indicated that the general fund ended the 2012 fiscal year with an unassigned fund balance deficit of approximately $5.2 million. In other words, over the four-year period, the city’s general fund balance decreased by about $21.6 million.

Brown has stated publicly that that the city will need to take on even more debt to address cash flow problems later this year. In addition, the city's credit rating, which was already downgraded this past January, will in all likelihood be reduced further, possibly resulting in Niagara Falls being unable to issue debt at all. DiNapoli’s report predicted “significant cash flow shortfalls” throughout the rest of the year.

“While the City has been significantly affected by the casino revenue impasse, its financial condition has worsened significantly due to its budgeting practices,” the auditors wrote.

Unsurprisingly, Niagara Falls Mayor Paul Dyster disagreed with much of the criticism, going so far as to say he found much of it “ironic.”

Regarding the Seneca casino impasse, he wrote;

“The City has been forced to choose among largely bad options with little guidance as to what constitutes best practice under often unique circumstances,” Dyster wrote.

This coming from a man who once let his constituents believe he was instrumental in hammering out the SALT II nuclear armament accords with Leonid Brezhnev and other Soviet blockheads 35 years ago.

Dyster then goes on to suck up to DiNapoli and other officials in the Comptrollers office who have merely stated formally what the Niagara Falls Reporter has been documenting for years – that this administration has shown all the responsibility of drunken sailors when it comes to protecting the taxpayers’ investment.

“We want to thank you for your hard work and insight on the issues covered in the draft report, and for your willingness to discuss it's preparation and preliminary conclusions in the exit interview and subsequent conversations,” the mayor wrote.

Thank you very much. Elvis has left the building.