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By: Tony Farina

Time is growing short for Niagara Falls elected officials to plug a nearly $14 million hole in next year’s budget, primarily the result of the loss of casino revenues from the Seneca Nation due to the current dispute with the state which is slated to go to a contentious arbitration in December.

Unfortunately, the administration of Mayor Paul Dyster has been relying heavily on the casino money to keep afloat, against the advice of the state comptroller, and now the money has dried up.

The city kept a lid on property taxes from 2014 through 2017 by using about $9 million a year in casino money and about $2.9 million in reserves, but now the gaming money is not available and the reserve levels have been severely weakened.  The state comptroller had advised the city to stop using the slot money to balance budgets back in 2013 but the warning went unheeded.

Now, with another bond downgrade in the city’s creditworthiness back in July by Wall Street, the rubber has hit the road and the city is reeling under the pressure with lawmakers trying to find a way to close the projected 2019 gap without gutting services and raising property taxes.

There are only three more council meetings before the Dec. 1 deadline to deal with Mayor Paul Dyster’s spending plan for 2019, and timing is important because the City Council will need to hold a public hearing before acting on approving a $168 yearly garbage user fee to raise about $3 million to cut into the deficit.  Along with a $12.3 million aid promise from Andrew Cuomo, which the governor has said must be paid back if there’s a settlement with the Senecas, the combination would temporarily resolve the crisis.

“The garbage user fee would be helpful in two ways,” says Council Chairman Andrew Touma.  “It could possibly help our bond rating by showing that we are less reliant on casino cash with a recurring revenue source, and it could have a ripple effect on everybody with more money available, hopefully in addition to the casino cash, to help create jobs and put people to work.”

The garbage fee was recommended by the state restructuring board and by the council’s own financial advisory board to create a sustainable source of revenue for a city that desperately needs more revenue, a need heightened by the stalemate with the Senecas with the arbitration outcome very uncertain.

Touma says the administration is currently in negotiations with Modern Disposal to try and get something more in garbage pickup for residents as part of the new fee.

And as Touma notes, many other municipalities, like nearby Buffalo, have already approved garbage user fees to help balance budgets.

Based on information supplied by the Buffalo city comptroller’s office, Buffalo’s user fee consists of a flat fee of $118.86 plus a variable depending on the size of the tote.  For example, the new fee for residential adds $43.75 for a 35-gallon tote. A typical Buffalo homeowner with a 95-gallon tote is now paying $237.61 per year.  Commercial fees are higher.

Touma notes Niagara Falls has kept property taxes in check for the last several years and last year the council cut $1 million from the expense side, much of it through workforce attrition.

As Touma hopes for support from his colleagues for a public hearing on the proposed user fee to better inform residents, lawmakers are continuing to meet with department heads, looking for every possible way to downsize in the face of the uncertainty of the budget situation going forward.

The city must continue to work to find ways to reduce costs and boost revenues in the face of the budget uncertainty, created to some extent by controversial spending policies and the over-reliance on casino cash despite the warnings from the state’s chief fiscal watchdog.

This is the second stoppage of casino cash, the last one ending in 2013 when Niagara Falls was estimated to be behind by more than $60 million in casino cash during the four-year gaming war, finally settled between Gov. Cuomo and Seneca President Barry Snyder.

In the current dispute, the Senecas claim there is no language in the compact extension that requires them to pay the state any more money after 2017. That will be the issue at the December arbitration, with Cuomo in the middle of it, assuming he wins re-election next month.

I wrote an analysis of Dyster’s loyalty to Cuomo during the last gaming war that suggested the mayor played a smart hand in standing mute during all the heated rhetoric that was going back and forth between the state and the Senecas, banking on Cuomo finding a settlement, which he did.  The stakes may be even higher this time, especially if there’s no settlement to the dispute.

Politically, it appears the city misplayed this hand by over-relying on the casino cash after 2013, enjoying the windfall of $89 million that flowed to Niagara Falls after the settlement, only to be dealt a losing hand by the state’s apparent oversight in not getting the compact extension language in place, leading to the new dispute.

If there’s no garbage user fee to help with next year’s shortfall, and if there’s no resumption of casino cash, the city’s losing hand will get much worse.