Niagara Gazette

Local News

April 3, 2012

Falls enacts spending freeze

NIAGARA FALLS — City lawmakers moved Monday to impose spending restrictions in hopes of avoiding future financial problems as Niagara Falls continues its wait for millions of dollars in casino cash.

In response to recommendations from the controller’s office, the city council adopted a resolution calling for an immediate   freeze on spending in several areas, including requests for all non-budgeted items, personnel and travel as well as discretionary   purchases made by Mayor Paul Dyster, City Administrator Donna Owens and all department heads.

The resolution indicates that no such expenditures will be approved by the council unless and until City Controller Maria   Brown advises members that the city’s finances can sustain them.

The council’s move followed a report earlier in the day from Brown who said the city has reached a point where it can no longer   afford to cover expenses for items tied to casino cash with surplus dollars contained in the general fund.

Brown noted that the city had a total fund balance of $20.3 million at the end of 2010, including $15.2 million in special   projects fund balance and $5.1 million in undesignated fund balance. She said the city used $7.4 million in special projects   fund balance in 2011 and has so far used $3.5 million from the same account this years.

Although the city had $9.3 million in special projects and undesignated fund balance as of March 27, Brown said it also has   spent $15.3 million in casino funds it has not yet received, leaving a cash shortfall as of Monday of $5.9 million. Projected   spending on casino cash-related items moving forward, including debt service, economic development personnel and the ZOOM   team, would add $6.3 million in additional obligations to be covered this year by casino revenue that has not yet been received.

If casino revenues do not arrive by the end of 2012, Brown predicts the city will face a cash shortfall of $21.6 million.

“Available cash is drastically lower than in past years,” Brown said. “This cash is needed in order for the city to function   as well as we want it to function. This needs to be addressed now.”

Four of the council’s five members voted in favor of the spending freeze resolution, arguing that the city — which has not   received a casino cash payment in two years — can no longer afford to continue business as usual.

“We’re doing this to prevent tax increases and prevent layoffs,” said Council Chairman Sam Fruscione, who joined lawmakers   Robert Anderson Jr., Glenn Choolokian and Charles Walker in supporting the spending freeze.

Councilwoman Kristen Grandinetti cast the lone ‘no’ vote, saying she felt it contained language that “went too far” in terms   of imposing the council’s will on the administration’s ability to run day-to-day operations.

“I am concerned that this resolution exceeds the power of the council based on the (city) charter,” she said.

The resolution was one sign of a new direction for city spending in light of the casino cash crunch. The council rejected   several smaller spending requests from Dyster’s administration, including one that would have allowed a company to tend to   the medians on John B. Daly Boulevard and another covering costs incurred by the city in response to recent windstorm damage   in the community.

The council majority suggested more projects will have to be reconsidered in the future if the casino cash situation doesn’t   change soon. Items on the list could include street repairs and the city’s ZOOM community cleanup team.

“We’ve got to be very careful of what we do from now on,” Choolokian said.

Council members said despite the current challenges, they are committed to maintaining current staffing levels and services.   They said their goal is to avoid layoffs, get through the year with sufficient cash flow and enter 2013 in a position where   taxes do not have to be raised.

Dyster indicated that his administration shares the same goal. Although he said he too is concerned about the language of   the council’s spending freeze resolution, his administration will continue taking the necessary steps to keep expenses in   line and save city workers their jobs.

“That’s our objective,” he said. “The administration shares the council’s concerns.”

Dyster also defended the city’s spending practices in recent years, saying the administration and the council helped establish,   through responsible budgeting, the $20 million surplus that has helped Niagara Falls survive two years without any new casino   cash.

He suggested the real problem is not the city’s spending habits, but the dispute between the Seneca Nation of Indians and   the state which has held up revenue to host communities like Niagara Falls.

“We were prepared because we budgeted conservatively, but who could have predicted that two years after this protest, that   we thought would last, what, two weeks, a month or whatever, two years later we’d still be waiting for a our first payment   since March of 2010?” Dyster said.

Brown agreed, noting that the city is now owed revenue for 2009, 2010 and 2011. She said if the money were to arrive, the   city’s financial situation would immediately improve.

“Once the casino money comes in, we’ll be in great shape,” she said.

City lawmakers discussed plans for prodding the state and the Senecas to come to terms on a deal to get the casino revenue   flowing again, including use of an ad hoc committee formed by the council earlier this year.

Dyster noted that during a visit last month, Lt. Gov. Robert Duffy indicated that it may be possible for the nation to provide   direct payments to host communities.

Dyster suggested a direct payment plan was nearly approved last year and may be the best option for the city moving forward.

“We need to circle back in that direction,” he said.

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