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JULY 14 - JULY 22, 2015

We Must Bring the City Back from the Edge of Insolvency

By John Accardo

JULY 14, 2015

John Accardo

It is my intention to show the residents of Niagara Falls, that we have reached a critical point in the history of our great City.

It is my purpose to shine a light on the past budgetary practices that have put Niagara Falls into a sink hole larger than any you can find on 72nd or 100th street.

It's time that we have a real leader who understands the financial challenges that lie ahead and is committed to adopting a truth in budgeting policy that will accurately show the financial outlook of this city.

It is my commitment to the people of Niagara Falls that not only will our budget be open and honest, but it is my promise as mayor to have a fully transparent administration in every action that we take.

I have sent a letter to the State Comptroller, asking that he and his office take immediate action to update his financial analysis that was prepared in 2013.

In that review, State Comptroller Tom DiNapoli stated that the City administration has willfully used non-recurring revenues in its attempt to fix the structural imbalance that could potentially force the rating agencies to either downgrade or suspend the city's credit rating.

Furthermore, he warned against depleting the fund balance reserves while recommending that Niagara Falls adopt more structurally sound and realistic budgets.

Now, two years later, this advice, these warnings, were conveniently ignored by the Mayor and his administration.

I have spent many hours looking over the last five budgets and analyzed how they impact the future of

Niagara Falls. One recurring theme is what is known as a structural deficit. Simply put, that means recurring revenues were not sufficient to fund recurring expenditures.

In every budget, there exists revenues generated by a tax levy, sales tax, bed tax, and casino money, among others. These are examples of recurring revenues. The City can project and count on these areas to generate revenue every year. When the actual receipts of these revenues are totaled up, they consistently fail to meet the needs of recurring expenditures.

The current Mayor has ignored his responsibility to achieve structurally balanced budgets in order to spend on projects that do not add to the quality of life for the residents of Niagara Falls. This has only made the problem worse.

As Mayor, I am committed to achieving structurally balanced budgets while providing basic public services like public safety, road maintenance, and other mandated costs.

Another key issue that this administration doesn't want to discuss is the constitutional tax limit.

Essentially, a constitutional tax limit is the maximum amount of real property tax that may be levied against residents in any fiscal year. The State Constitution restricts local government's ability to levy excessive taxes by capping it two percent of the five-year average of full property valuation. This is important to note because in a recent presentation before the City Council, we learned that the 2015 budget was on pace for even less revenue, as Casino money and sales tax are expected to drop significantly.

While I certainly do not advocate raising taxes to fix the structural problem, we must be aware that the city is at or near its full potential to raise revenues through taxes.

This development will most certainly cause the bond rating agencies to take negative action against the city. If the city were to lose access to credit markets, unfortunately it is "game over" for the future of Niagara Falls.

I will do everything in my power as Mayor to prevent this unfortunate situation from becoming a reality.

Now that we have an understanding of what a structural deficit is and how a constitutional tax limit prevents local government from taxing their way out of insolvency, it's time we turn to the 2015 budget and the adverse effects going forward.

Starting on 2015, the structural shortfall is in excess of $7,000,000. At the end of the year 2014, Niagara Falls has a fund balance of $8,600.000.

After applying the $8,600,000 to offset the 2015 shortfall of $7,000,000, Niagara Falls will have only $1,600,000 of fund balance available.

Going to 2016 Niagara Falls will have a shortfall of $9,300,000 because the $7,000,000 structural shortfall remains and an additional $2,300,000 of shortfall is realized since the growth of revenues is less the growth of expenditures by $2,300,000 and not included in the 2015 budget.

Niagara Falls cannot solve this budgetary shortfall with real property tax increases because Niagara Falls is at the constitutional taxing limit.

Niagara Falls is in need of major new revenue streams and expenditure reforms.

In closing, the time has come to elect a new leader who understands the severity of the problem and the desire to look for new ways and new ideas to move Niagara Falls in a new direction. I repeat -- we cannot raise taxes to solve this problem. We must and we will, look at the expense side of this budget. We must find ways to provide basic services better, smarter, and cheaper.

It is time to reengineer how Niagara Falls government operates, not simply kick the can down the road. Let us remember Einstein's definition of insanity "doing the same thing over and over, and expecting different results." My friends, it is time to end this insanity.





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