Niagara Gazette

December 10, 2012

Familiar financial outlook

By Justin Sondel
Niagara Gazette

Niagara Gazette —

State Comptroller Thomas DiNapoli visited Niagara Falls on Monday to present his office's "fiscal profile" of the city. 

The new report - part of a larger effort by DiNapoli to offer cities and municipalities in New York a "snapshot" review of their financial conditions - offered much of what city residents have known for years: Niagara Falls has struggled amid population loss and suffered a major financial hit when its annual allotment of casino revenue dried up in 2009. 

"Although the city's failure to receive planned casino revenue has significantly impacted its current fiscal condition, Niagara Falls' problems are chronic in nature," the city's Fiscal Profile 2012 concludes. "At a population of 50,193 in 2010, Niagara Falls is literally half the city it was in 1960."

During a stop at City Hall, DiNapoli outlined various aspects of his office's new "fiscal profile" program which has been created to provide lawmakers and citizens with a summary of the financial status of municipalities across New York. 

The first pair of profiles focused on Niagara Falls and the city of Salamanca - two communities dealing with the added fiscal stress of not receiving slot machine revenue promised to them under the state's Gaming Compact with the Seneca Nation of Indians. DiNapoli said the two cities were not singled out for any particular reason, adding that they are just the first in a series of planned reviews covering all 61 cities and perhaps other municipalities across New York. 

"We will start and stick with the cities, particularly the cities that are in trouble," Dinapoli said.

The fiscal profile for Niagara Falls highlights several areas where the city lags behind the state average including:

• A median income of $31,425 as compared to a state average of $55,603.

• A poverty rate of 17.6 percent as compared to a statewide rate of 10.8 percent.

• A tax-exempt property rate of 44. 8 percent as compared to the 32 percent state average.

The profile points to the collapse of local industry and the city's 51 percent decline in population - the most of any city in the state since reaching its peak in 1960 - as major contributors to current economic struggles.

Niagara Falls and Salamanca face unique fiscal challenges, each dealing with the loss of casino revenues. But, the two cities also face challenges causing fiscal stress in many upstate communities like falling tax revenues and ballooning health care and pension costs, DiNapoli said.

"Local governments are facing more stress today than anytime before," DiNapoli said. "Those problems are not going away anytime soon."

DiNapoli's report notes that Niagara Falls was making some "headway" recently by building up its reserves and investing in economic development activities to attract business. It also suggests the gaming revenue dispute hampered those efforts, prompting the city to spend down its fund balance in both 2010 and 2011. 

The report also cautions that the city remains in danger of exceeding its "Constitutional Tax Limit," which caps the amount of property taxes cities, villages and counties in New York State are allowed levy. 

"Most cities are not in danger of exceeding this limit, which is set at 2 percent of the five-year average of their full valuation," the report reads. "However, in 2004, Niagara Falls came very close to its limit, and by 2006, the city was within 2 percentage points of it, giving the city very little flexibility to increase its levy. Although the city had a more comfortable tax margin of about 23 percent as of 2012, it is still considered close, especially since the city's property tax value growth remains slow, suppressing growth in the CTL." 

DiNapoli said the fiscal profiles, which will be issued and updated on an annual basis, are synthesized from data the state already collects from municipalities.

"It's not a new mandate, not a new requirement" DiNapoli said.

The purpose is to provide a third-party analysis for local officials to use when making decisions and to provide more information for the public, creating a better informed citizenry, DiNapoli said.

"If you don't give the public more of a chance to be informed about what's going on - honest number - it's going to be hard for them to have the kind of input that's going to help move public policy in the direction that's going to be in the interest of what the community wants," DiNapoli said. "That's kind of what democracy should still be all about."

Mayor Paul Dyster compared the fiscal profile to a regular doctor's check up.

"If you don't know what's happening to you, you are not going to be in a position to figure out what to do to fix the problem," Dyster said. "The earlier you know what is going on, the more options you have for a remedy."

Dyster - who was praised by DiNapoli for his efforts to plan for the city's future - said he and City Controller Maria Brown try to think of "five-year plans" when considering the city's finances.

"We want to look past the problems of today and look toward problems that we are facing in the future," Dyster said.

Dyster said the city's financial problems go beyond the stoppage in casino funds and he appreciates the state's efforts to help Niagara Falls and other communities get out ahead of those and other issues.

"We need a very strong partnership with the state to get us out of this  situation," Dyster said.