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DEC 16 - DEC 24, 2014

Exploding the City Budget and Finance Myths

By Anna M. Howard

December 16, 2014

The Dyster administration 2015 budget, after having begun its irregular and dramatic journey four months ago, limped to the finish line and gained passage before collapsing on the floor of the council chambers Monday evening.

All in all the 2015 municipal budget process was a shameful display with more than enough blame to go around from the mayor to the council to all Dyster administration points in between.

The 2015 budget will have a tax increase for homeowners of 1.5 percent and business owners will see a 6.6 percent increase.

How did the routine bureaucratic act of creating the city's annual spending plan become this dramatic, complicated and confusing?

It began with Dyster announcing that the anticipated city debt for 2015 was as high as $9 million. He then slipped his proposed budget into his desk and hid it for the next 37 days. On November 7 he finally released it to the residents and council.

To this day he has refused to explain why he withheld the peoples' budget. It was due on October 1.

What we do know is that during those 37 days both the mayor and the acting city controller took turns telling the press that the deficit was expected to be (at various times) as high as $9 million and as low as $3 million.

They never properly explained the exact reason for the deficit and they never gave a comprehendible reason why the deficit soared and fell week to week.

What followed after November 7 were a series of contentious council budget sessions that saw the council make amendments to Dyster's 2015 budget, followed by the mayor vetoing most of those amendments, with the council overriding a few of those vetoes, as it all concluded on Monday evening with the tax increases.

The mayor must explain why he withheld the budget and crippled the entire budget process. This shameful display of non-transparent bureaucratic chicanery by the Dyster administration must be exposed so that it never happens again.

Meantime there are several fallacies out there among the populace of Niagara Falls concerning the 2015 budget of Mayor Paul Dyster. It is our pleasure to set the record straight:

That the state issued Niagara Falls a clean report in their 2013 audit.

The audit of the NYS Comptroller's office as issued in the spring of 2013 assessed the city's financial management system. The report stated that the city was repeatedly using "one shot gimmicks" to close operating deficits. The audit suggested that such gimmicks be ended immediately.

In opposition to those recommendations, the Dyster administration prepared the 2014 budget by closing the budget deficit by using $4 million in cash reserves held by the city in the event of an emergency to close the budget gap. The Dyster administration again is planning on closing a current $4.5 million budget gap for 2015 by using city reserves in violation of the State Comptroller's warning.

Also reported in the 2013 audit, page 12, was notification that funds were apparently lost and could not be located within the budget. Page 12, in part, reads, "Beyond the amount reported as unassigned fund balance in the capital projects fund, additional funds may be in other projects which should also be returned to the general fund. At the end of our fieldwork, City officials were unable to demonstrate, and we were unable to definitively establish, the total amount of these other moneys. However, based on our review of the records, we conservatively estimate that the amount could range from $1 million to $1.4 million. Furthermore the City has maintained unassigned fund balance in the debt service fund, which should have been transferred to the general fund."

Funds lost within the city's budget? How does that happen?

While the most of the state audit document was made public (most of the state audit of Niagara Falls is available on the NYS Comptroller website) there was part of the audit that was labeled "confidential" and not revealed to the public, called the Information Technology audit. The Reporter has learned that this "sub-audit" took the city to task with regard as to how the city's financial-computer-system was open to attack from both outside and inside city government. The Reporter is seeking a copy of that Information Technology audit.

That casino cash cannot be used for non-economic development matters

The Reporter has written about how the Dyster administration spends casino funds on projects and expenses that are not remotely connected to what is commonly considered "economic development." Despite what local pundits and former city office holders say, there are no set rules or definitions as to how state law 99-H interprets "economic development."

Mayor Paul Dyster used casino funds for the failed Isaiah 61 house rehab program; he's given Community Missions funds to avoid the federal tax man; he's bought cars for Code Enforcement; police equipment; fire equipment; hired contractors to trim trees and remove tree stumps; paid police overtime; paved city hall parking lots and hired consultants and a more with "casino funds."

The only rule of casino cash spending for Mayor Dyster seems to be "You can only spend casino cash on economic development, and economic development is what I and only I declare it to be."

The budget preparation system is orderly and transparent

The budget preparation process is anything but transparent. That lack of transparency begins with the fact that the mayor held the proposed 2015 budget hostage from October 1 to November 7…37 days late with no explanation for his actions.

That delay caused disarray in the budget process with hurried decisions and a lack of time to review the proposed budget. This will play out throughout 2015 as city residents are forced o live with the fruits of the (deliberately?) late budget preparation process.

That the 2015 budget was prepared with input from city department heads

Sources in city hall say that most department heads had no input into the budget process. Jobs were eliminated without warning. John Cahill, chief of MIS, learned of his own job abolishment when the mayor rolled out his spending proposal on Nov. 7.

How could that be? The "Dyster team" of Dyster, Acting Controller Maria Brown, City Administrator Donna Owens, HR director Ruby Pulliam and Corporation Counsel Craig Johnson, met and made cuts and budget adjustments for 2015. We challenge the Dyster administration to prove us wrong in our assessment.

That the city budget and finance system is transparent and "on line"

Right now you can read up to date casino cash expenditures online on the city's website. That is due to the demands of NY Sen. George Maziarz in the face of stiff resistance from the Dyster administration.

While the public can see, finally, after seven years, the casino account balance, the public cannot see casino cash interest. The "transparent" Dyster administration has taken to spending interest funds and not reporting it on the city website.

In fact Senior Planner Tom DeSantis was approved for expensive new rugs and curtains courtesy of the casino interest account. While the council had to approve the mayor's expenditure, the account balance and related information has yet to be shared with the public.

The reality of the "transparent" Dyster administration is that contracts, winning bids and requests for casino cash expenditures are routinely given to the city council at the last minute, which limits questions and research needed to make informed votes. The Hamister contract, the Isaiah 61 casino cash award and the mayor's call for golf course cart paths being just three examples of this.

Employee overtime, stipends and promotional pay appear in an almost whimsical fashion as does office equipment, new vehicles and other expenditures. Compounding this is April of each year at which time the "budget is opened" and money begins to flow in mysterious ways moving from line to line and project to project.

The Dyster cheerleaders who applaud the administration for being financially transparent should consider this: the NYS Comptroller has ruled that the city continues to use unacceptable accounting "one shot" gimmicks to manage its finances and that money has literally been misplaced within the city's own budget.

In light of just those facts we'd say that bets are off as to the city having transparent or accountable financial reporting systems in place.





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©2014 The Niagara Falls Reporter Inc.
POB 3083, Niagara Falls, N.Y. 14304
Phone: (716) 284-5595

Publisher and Editor in Chief: Frank Parlato
Managing Editor: Dr. Chitra Selvaraj
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