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Dyster to Unveil Spending Plan As Warnings of State Comptroller Ring True

By Tony Farina

Maria Brown has the best understanding of budgetary matters.
Sandy Peploe is Brown’s assistant?

Last summer, State Comptroller Tom DiNapoli issued a scathing financial audit of Niagara Falls that acknowledged the now-resolved gaming dispute as a major factor in the city's dire fiscal condition but nonetheless criticized the city for spending down its fund balance in the face of the dispute.

State auditors found what they described as a pattern of structural deficits, meaning revenues could not support expenditures, leading to an annual $12.4 million budget gap with the city relying on "one-shots" and fund balance to close the shortfall. It was an approach, they said, that negatively affected the general fund's financial condition.

That report was issued before the state and the Senecas settled the gaming dispute and the city received $89 million under the agreement, allowing for the repayment of money borrowed from the general fund with a sizable surplus.

But Mayor Paul Dyster himself, as he prepares to present his 2014 budget to the council today (Tuesday, Oct. 1), said in an interview with the Niagara Gazette that even though the city now has a healthy reserve fund, it cannot use those funds, by law, to fill holes in the budget, a move he also said would not solve the city's long-term issues anyway.

So what can we expect from the mayor for 2014? Last December, he proposed an 8.3 percent property tax increase in his so-called "disaster" budget but the council majority trimmed expenses-mainly by cutting out $3.1 million that had been budgeted by Dyster for USA Niagara, a state development entity---and avoided the tax increase.

But what will happen this year with no USA Niagara money to cut? The city for years has been spending more money than it takes in, causing recurring structural deficits, and now the lack of planning for the last several years is catching up to the city and may require painful medicine, like layoffs, service cutbacks, and a tax increase.

The mayor and his top aides have been tight-lipped about what will be in the budget that's presented today and could not be reached for comment. But he sounded an ominous note when he did say publicly last week that "we still have a structural deficit problem," meaning more money is going out than coming in.

The tax levy has remained fairly steady over the last few years, and is currently about $28.1 million. But operating costs for things like fuel, garbage, and general supplies have increased, and personnel costs, which are about 80 percent of the budget, have also increased. Those costs include salaries, health care, and pensions and there are still major unsettled labor contracts like police and fire on the horizon.

What the state comptroller warned about just a few months ago is now coming home to roost in Niagara Falls, and it will be very tough to cut enough out of the budget to make ends meet in the coming year without significant revenue increases and spending cuts.

There are other political factors to consider this year, including the weakening of the council majority that cut USA Niagara funding in December to avert a tax increase. One of the three members (Sam Fruscione) of the council majority who made those cuts to the mayor's disaster budget lost the Democratic line in the September primary, and is unlikely to win re-election in November. A more pro-Dyster council is seen as likely by most observers.

And within the Dyster administration, it appears the mayor has lost confidence in Comptroller Maria Brown who has been cut out of the budget process by virtue of a letter given to her by City Administrator Donna Owens which basically froze her out of the process in favor of a civil service employee in her department.

Brown was not happy to be relieved of her budget role in favor of an underling, especially coming as it did in a directive from the city administrator and not the mayor, a possible violation of the city charter. But Brown is a trooper and is carrying on her other duties despite the obvious lack of confidence bestowed on her by the mayor. It could be a sign that Dyster will move to get rid of Brown, seen by many as a strong voice for conservative fiscal planning, when, as expected, a new council takes over in January.

Dyster reportedly told a council member that he was taking the action to relieve Brown of her budget duties because Brown was highly stressed and needed a break, but he never talked to her and could not be reached for comment. Donna Owens, reached by telephone, said she was busy at a meeting and would not comment about personnel matters anyway. She quickly hung up.

As for the fiscal problems Dyster faces, he is expected to seek state help from the Financial Restructuring Board for Local Governments which can make recommendations to help distressed municipalities like Niagara Falls and can offer grants and loans up to $5 million in some cases.

The new board can also serve as a binding arbitration panel for binding arbitration. There are strings attached because if a municipality agrees to the board's recommendations, it would be contractually bound to fulfill those terms in order to receive the aid.

It sort of sounds like a control board, and it looks like Dyster is willing to go there if it can help him deal with the fiscal crisis the city faces. We will all know much more after his spending proposal is presented to the council today at 4:30 in council chambers.

What is coming to pass is the warning issued by the state comptroller in his audit that Niagara Falls had spent down its reserves and failed to plan for the future, and needed to get its act together to meet coming challenges. Well, the challenges are here and we'll see what happens next as the mayor unveils his proposed spending plan for 2014 against a backdrop of fiscal crisis.



Niagara Falls Reporter - Publisher Frank Parlato Jr. www.niagarafallsreporter.com

OCT 01, 2013