Mayor Dyster, do-nothing Council to thank for City of Niagara Falls’ Looming Fiscal Nightmare

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“The City’s adopted general fund budget for 2017 was approximately $93 million.” With casino revenue going away, it’s about to hit the fan, and we don’t mean this pie.

It hit us right between the eyes the instant we pulled it up on the computer.

The as yet-unreleased New York State Comptroller’s draft audit, or “Report of Examination – City of Niagara Falls Financial Condition” for the period from January, 2015 to late June of this year, admonishes at the bottom of each and every page, in bold capital letters:

“*DRAFT – NOT INTENDED FOR EXTERNAL DISTRIBUTION*”

“CONTAINS NON-FINAL, INTRA- AND/OR INTER-AGENCY MATERIALS THAT MAY BE EXEMPT FROM DISCLOSURE UNDER THE FREEDOM OF INFORMATION LAW.”

Despite this stern warning, Buffalo’s WGRZ-TV broke the story last week that the city of Niagara Falls is most certainly on course for more and worsening budget shortfalls and depletion of its reserve fund balance, quoting extensively from the state document that was apparently leaked to the local news outlet. It is generally known that the progressive-leaning WGRZ is frequently out in front on news stories that focus on Niagara Falls and City Hall.

Having obtained a copy of the draft audit (now posted to our website, www. NiagaraFallsReporter.com), which is not available on state or city government websites, or anywhere else on the internet, we bring some of the highlights to you.

“A top priority of the Office of the State Comptroller is to help local government officials manage government resources efficiently and effectively and, by so doing, provide accountability for tax dollars spent to support government operations,” the cover letter, addressed “Dear City Officials,” reads. “This audit’s results and recommendations are resources for local government officials to use in effectively managing operations and in meeting the expectations of their constituents.”

Recently, State Comptroller Thomas DiNapoli said in an interview that, “Our charge is not to look at an agency (or city) and then be a mouthpiece to say how wonderful everything is. Nor is it our role to go out of our way to find things that are wrong when they’re not there. Our charge is really to be fair, and to be objective, and to be reasoned.”

He was responding to a question posed to him as to whether or not he had been picking on Gov. Andrew Cuomo. Mr. DiNapoli, the state’s chief financial watchdog, had performed audits that shone a decidedly negative spotlight on the governor’s flagship Excelsior Tax Credit, Recharge NY and Start-Up NY economic development programs. There are further audits of Empire State Development in the offing. Although both are Democrats, Mr. DiNapoli is seen as more of an adversary than a political ally of the governor.

Therefore, the dry-eyed assessment of the status quo with regards to the discontinuation of casino funds, on page 4 of the draft audit, is greatly dissimilar from anything we have seen or are likely to see in press releases from Gov. Cuomo’s office or Niagara Falls City Hall.

“In 2013, the compact was extended to 2023. However, the compact’s section concerning the revenue sharing requirements was left unchanged. In 2017, the Nation announced that it would no longer make casino revenue payments to the State… While the Governor’s office contends that the Nation has a financial obligation to continue making these payments, an agreement has not been reached… The City’s casino revenue is an unreliable financing source.”

Unrestricted and Appropriated fund balances projected to go negative by the end of this year (Source: NYS Office of the State Comptroller).

“As of May 31, 2017, the City had $25.4 million of casino revenue available… We estimate that by December 31, 2017, the City will have $11 million of casino revenue remaining. City officials do not anticipate receiving any additional money under the current compact.”

“(The city) will nearly deplete the remaining casino revenue by the end of the 2018 fiscal year.”

Bam. Any questions?

“City officials have not developed a plan to transition away from using casino revenue to balance the budget,” the draft audit continues, “In fact, instead of cutting back, City officials increased the amounts of casino revenue to balance the budgets in recent years.”

And next, an excerpt from the draft audit that is seeing the light of day for the first time, not quoted by any other news source. A stunning indictment of the leadership of Mayor Dyster and the City Council, using blunt language rarely encountered in bureaucratic documents.

“City officials did not develop a multiyear financial plan. Had such plans been developed, City officials would have had a valuable resource that would have allowed them to make more informed financial decisions. For example, such a plan would have shown the magnitude of the impact of the loss of the casino revenue and provided a tool to assess the impact of different approaches to using the balance of the funds on hand.”

“This may have mitigated the City’s declining financial condition.”

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