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OCT 14- OCT 21, 2014

With $9 M Deficit, Cuts Wonít Come Easy

By Frank Parlato

October 14, 2014

The workplace of $100,000 department heads in one of the highest taxed and poorest cities in America.

The Niagara Falls Reporter has learned there is an estimated $9 million shortfall expected in the 2015 budget for the City of Niagara Falls.

The $9 million gap is the difference between what the city expects to collect from property and sales tax, state aid and other revenues and what the administration of Mayor Paul Dyster plans to spend.

Dyster is required to present a balanced budget to the council, which means he must close the gap.

He has limited options.

By state law, the maximum Dyster can raise taxes is about two percent, which means he can raise less than $1 million through tax hikes, unless he can secure state approval for a larger increase as he attempted to do in 2012.

The deadline for such a request appears to have passed, however.

If he cannot raise taxes more than $1 million, he can perhaps cut costs to shave the other $8 million shortfall.

Dyster told the Niagara Gazette, "there's a structural problem (budget) and most of it is due to payroll."

Payroll - as it is today - was negotiated in the past by Dyster and the unions - and is dictated now by labor contracts.

Dyster cannot cut hourly wages for union workers. He could cut a few non-union employees - mainly department heads.

Mayor Paul Dyster must bridge a $9 million budget gap that, for the most part, he created.

During the administration of Mayor Vince Anello, eight years ago, the average department head’s salary was $50,000. Salaries of $100,000 for Dyster’s department heads are commonplace.

In 2011, Dyster gave raises all around when he ran for re-election, which happened to coincide with similar increases he approved with union contracts negotiated during his election year.

A smart ploy, unions often agree to contracts that expire during election years. And smart politician: after Dyster agreed to huge union concessions in 2011, he picked up union endorsements.

Now, faced with a deficit, he can't cut union wages. If he cut 20 percent of the salaries of his department heads, it wouldn't save $500,000.

The next place is layoffs.

Despite a bloated municipal workforce of 656 employees, it will be a challenge to cut jobs. Firstly, 2015 is an election year for Dyster. Most city workers and their families vote.

Even if Dyster cut 10 jobs, that would save only about $700,000. Cutting even 100 jobs won't be enough.

And that's not going to happen.

Overtime is next.

Union contracts on "manning levels" encourage loads of overtime especially in police and fire. Many policemen and firemen double their salaries and earn over $100,000 per year through overtime. These unions are strong and its members vote. Overtime cuts - which are hugely unpopular with workers who have built their lifestyle around overtime and who vote - are likely to be small.

While Dyster has permitted substantial overtime for a small group of city hall employees, even if these are curtailed, it won't amount to $400,000.

Payroll, layoffs, tax increases, overtime cuts- all told might equal $2 million.

What else could be cut?

Last month, rather than cutting, Dyster increased spending by adding something the old council cut out of the budget.

In 2012, Dyster proposed laying off30 people. But the old council majority - of Sam Fruscione, Glenn Choolokian and Robert Anderson - chose instead to keep the jobs and cut the city's $3.1 million annual subsidy to USA Niagara. This closed a large portion of the 2013 shortfall with a single cut.

But Dyster and his new council majority - of Kristen Grandinetti, Andrew Touma and Charles Walker - agreed to restore the subsidy to USA Niagara - at a reduced, but still hefty, $1.5 million a year - for events and parties at Old Falls St. and for subsidizing conferences at the conference center.

That single increase - although coming from casino money - all but offset the savings Dyster could get from combined cuts of payroll, overtime, layoffs and a two percent tax increase in 2015.

In past years, Dyster drained the city's savings account - called "fund balance" - that every municipality has for emergencies and unexpected expenses. Dyster took $4.4 million from savings to balance the budget last year.

One might expect the same this year, which will all but drain remaining fund balance, savings that date back to the Anello administration.

Additionally, last year Dyster took $5 million of casino money to balance the budget. One should expect the same this year.

With these two items, he may balance the budget this year.

But not solve the structural deficit problem.

Next year, and the next, the city will spend more than it takes in.

This may be the last year Dyster can raid savings and tap casino cash.

In addition to the $1.5 million a year he and the council committed to USA Niagara, the mayor committed $4 million a year of casino cash to Gov. Cuomo's economic development contest in Niagara Falls.

Between this, and the rising cost of municipal debt - and other casino cash commitments - combined with declining casino revenues- it dropped more than $1.4 million between 2012 and 2013, and is expected to drop again in 2014 - little casino cash will be available in the future to balance budgets.

While Dyster has inherited pension and payroll problems from previous administrations, most of the deficit is of his own doing. Anello left office with millions in surplus, which Dyster spent.

Dyster also had something past administrations did not have: Access to tens of millions of casino cash. He chose to spend much of it on "economic development" projects, which apparently have created no new revenues for the city.

Revenues are almost exactly what they were during the Anello administration, while expenses rose 25 percent.

Dyster's use of casino cash on low income housing and other, arguably, unnecessary projects and extravagant purchases, instead of using it for items that were otherwise paid for out of the city's general fund, may be the problem.

For example, instead of giving $4 million in casino cash to the state each year, he might have told Gov. Cuomo he has to fund his own contest - with some of the $80 million the state gets annually from Seneca Niagara.

That $4 million of casino cash could go towards, for example, roads instead.

It would qualify for the legal use of casino cash, for good roads are necessary for economic development.

Among the many lavish casino expenditures was this $100,000 playground at Griffon Park. In any real world where money is carefully spent this playground would have cost $30,000.

 

And Dyster might have told USA Niagara that if they can't make enough money running concerts and parties on Old Falls St., or if conference goers can’t pay enough for their own conferences, the city can't pay for it either.

But there is little political will for such frugality.

Consider the decision to use $6,000 of casino money to buy senior planner Tom DeSantis new carpets and drapes for his offices. When a city hall official was asked, "why buy new carpets at a time like this," the person said, "the amount is so small it wouldn't even move a decimal point."

While that is true, frugality often begins small: "Many a mickle makes a muckle," is an old proverb which means a lot of small amounts, put together, become a large amount.

To prove the point, here are a few small (and large) expenses approved or spent by the city in the last year out of casino cash that might have been postponed or foregone. Added together, they would have gone a long way toward curing the problem of a city spending $9 million more than it takes in each year.

** Development consultants $72,000 (what development?).

** Ice Pavilion renovations on "old" locker rooms $300,000. And a consultant on how to renovate those locker rooms: $94,500 ((That's $400,000. Couldn’t brand new locker rooms for amateur hockey players hold a year of two?).

** Train station: $5,224,000. A new train station Is it really needed for a near bankrupt city?

** Hard Rock Concerts: $369,500. How can a city justify paying for concerts and at the same time look at tax increases and layoffs?

** Niagara Falls Blues Festival: $30,000.

** Downtown Parking Study: Desman Associates $112,430.

** Holiday Inn: $550,000. The city built a restaurant for a millionaire hotel owner.

** NFC Development Corporation grants: $368,581. Do city officials, who can't figure out how pay the city's bills, have the qualifications to decide which businesses should get a taxpayer gift? The NFC's track record is poor. Many businesses went out of business after getting the money.

** Then there are gifts to not-for-profit corporations, organizations that in other municipalities must fund themselves. New Jerusalem Reporting Center for Boys $90,000; Isaiah 61: $500,000 -- to renovate an old fire hall for offices and a store. (Within one week of the appropriation, the executive director quit and moved to Utica);Community Missions: $150,000. (The not for profit has IRS tax liens and the city bailed them out); Niagara Military Affairs Council: $160,000 and the list goes on.

These may be good organizations, but the city cannot pay its own bills.

** Then there was a dose of questionable expenses: A grant writer consultant: $95,000 (How many grants were achieved?).

** Code Enforcement got nine new Ford Escapes: $210,595 (couldn't they have gone another year?).

** DPW Director Dave Kinney got a brand new $40,000 SUV. His old one was only three years old and had 50,000 miles on it. (Wouldn’t most people facing a budget crisis keep their three-year-old car another year?).

** Then there were consultants. One got paid $7,329 to consult on what kind of signage was needed for LaSalle Waterfront and Griffon Park. There was a small 50-page park study that cost $57,000.

** Membership in Buffalo Niagara Enterprise: $50,000.

** Besides the garbage and recycling totes, which cost $2,214,449, the mayor miscalculated the cost of the garbage contract. Additional funds for Modern Disposal: $284,622 for 2014.

** Then there was the repaving of City Hall's parking lot: $468,720. (Could this have waited?).

And the list goes on ….

After awarding millions to all sorts of plans and schemes since June 18, 2013, when the $89 million (four years) in casino cash was released, casino cash has been used for everything from roads to consultants to concerts to overtime to trucks and cars.

It has been used as city money for all city things. It should now be used frugally.

This city, under Mayor Dyster, has not been frugal and, while, for now, he can drain savings and tap casino cash, if this extravagance does not change, the city is headed for a control board in the near future.

Then the cuts won’t come voluntarily. And they'll come deep.

Dyster and his council - except Glenn Choolokian - approved $500,000 to fix up this old fire hall on Highland Ave-- for a not for profit corporation.

 

 

 

 

 

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Publisher and Editor in Chief: Frank Parlato
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