Niagara Gazette

July 28, 2013

Present secure, but Town of Niagara finances questionable in future

By Timothy Chipp
Niagara Gazette

Niagara Gazette — Financially, the Town of Niagara is performing well enough in 2012 to earn a favorable rating from its independent auditor.

But Patrick Brown of Brown & Co. said the future doesn’t look quite as bright due to some heavy reliance on revenues they know will be shrinking.

The writing’s on the wall.

“You have a healthy fund balance, but you need to understand the general fund is operating without a town-wide property tax,” Brown told the board this past week. “In 2011, Moody’s rated you A2, which was a downgrade from A1 you were the year before. I was on that conference call, listening to their explanation. And their concern was your reliance on sales tax as that could fall off. Then what will the town do?

“The sales tax income has been strong and consistent, but you’ve got to find ways to keep your general fund’s expenses where they’re at.”

Thanks in large part to the sales tax figures, the town’s general fund balance sheet jumped to a “healthy” $600,000 total, roughly double its standing last year, according to Brown.

Similar balances were increased among the town’s water and sewer districts, which added $46,000 and $200,000 in extra revenue and savings respectively last year. But the good news stops there. The highway department, which has been in a financial hot-seat for years, still needs to work on building reserves but is “on the right track due to effective cost control and management,” Brown said.

The highway fund used another $33,000 of its savings up in 2012 in part due to a poor market for scrap sales and a lower total in sales tax revenue.

Sales tax is an issue Niagara representatives have wrestled with for a long time. Because the town hosts many large retail spaces and arguably the largest in Niagara County in the Fashion Outlets of Niagara Falls, its town board has long argued it should receive more sales tax revenue generated at these locations.

But the tax is distributed to communities throughout the county based on population. And Niagara, with a little more than 8,300 people as of the 2010 census, is not in a position to receive a lot of the money it generates. What’s worse, the town argues, is the population has shown to be in decline from its already low number according to 2012 estimates.

It’s an issue Supervisor Steve Richards said would be alleviated long-term if the law was changed to provide more sales tax revenue to the town despite its low population totals. But he’s also using Brown’s words of warning to examine right-sizing town government, even if it means looking outside the box for answers.

“We need to really control the size of government or we’ll be forced in the future to add a ... property tax,” he said. “We need to start right-sizing government by not replacing those who retire or leave. We need to watch how we spend. I’m also considering reaching out to Kevin Gaughan, the lawyer from Buffalo, to talk to us about possibly downsizing the board. As the town gets smaller, we need to consider all of our options.”

Contact reporter Timothy Chipp at 282-2311, ext. 2251 or follow on Twitter @timchipp.