What’s Needed In City Government is Basic Common Sense
By Vince Anello
Former Mayor, Niagara Falls
As you read this, the mayor, the city administrator, the city’s department heads and the city’s finance office are working on the 2017 budget.
Anyone who is familiar with the 2013 New York State Comptroller’s audit of our city’s budget or the city’s own third-party audit of the 2015 budget or who has read the Niagara Falls City Council Financial Advisory Panel report has to be concerned.
Our revenues have not kept pace with the annual increase in city spending. It’s well understood by a few. Even with the use of casino revenues, the city will not be able to meet its financial obligations by the year 2019-2020. As was stated in the recent report by Fitch Ratings, Inc., “Fitch believes the city’s financial resilience to be limited due to the importance of casino gambling transfers, over which it has virtually no control.”
The facts are indisputable. Casino revenue received by our city is steadily being reduced by market forces. Another revenue stream that may not meet expectations is sales tax. Even though tourism visits have increased over the past 10-15 years, much of the revenue generated by tourism is generated outside of our city.
City Council has no choice but to let the mayor know that the rate of increase in spending has to be capped off. Unfortunately no cost-saving measures have been initiated in the last eight years. The budget spending may have to be capped for several years. This initiative should be in the form of an ordinance legislated by City Council to ensure commitment and participation by all. This will send a message to everyone that the city is going back to basics.
First rule: Recurring expenses should be balanced with recurring revenues. It is important to project, as accurately as possible, those two opposing forces. The historical budget records of the past ten years should be seriously considered. A five year projection should be determined by careful evaluation of those records. With this information firmly understood, 75% of your responsibility as a councilmember is successfully met. Unfortunately the remaining 25% of the city council’s responsibility, we talk about 95% of the time
In our recent past, several audits have shown that recurring expenses are rising alarmingly faster than recurring revenues. Most recently, the City Council Financial Advisory Panel report cited the same concerns. I’m willing to bet that the NY State Restructuring Board will also find that this city has unhealthy financial habits.
The City Council should establish a prioritized list of what I call “necessities and niceties”. Example: A new park would be listed as a “nicety” and street maintenance, a “necessity”. The construction of a new municipal building was a necessity. While that of a new train station is a nicety.
The experience of six years on the Niagara Falls City Council and four years as mayor gave me the experience to speak about this subject with some authority.
My confidence is bolstered further by the documented fact that my administration, on Jan. 1, 2004, was met with a $3.5 million dollar deficit left by the previous administration. For 42 of my 48 months I worked with a dysfunctional city council majority.
On the other hand, Dec. 31, 2007, my administration left the current administration an $8.5 million dollar surplus and $38 million dollars of casino cash in the bank. In recent history the only other mayor that left his successor a surplus was Mayor Michael O’Laughlin.
Our city has received about $209 million dollars in casino revenue. If you consider the approximately 25% the city is mandated to share with others, city government has had control over $157 million dollars. More than 50% of the time this mayor has enjoyed a compliant city council majority.
It is estimated that by 2019-2020 we will not have enough casino revenue to meet our operational cost. The Fitch report supports this view in its finding that “Given recent declines in casino revenue transfers, Fitch believes general fund revenues are likely to grow more slowly than the rate of inflation going forward.”
The next administration will have less money for street maintenance, demolitions, the increased cost of sanitation and all other essential services.
Just like our own personal health; even though some ailments are predetermined by genetics, a few meds, exercise and healthy eating habits can provide a long, happy and productive life. If all you depend on is the meds, you’re lying to yourself and your doctor.
The City Council must do the same thing for our city government. We have to reduce our reliance on casino revenue, and exercise restraint in spending. The casino revenue that we now use for all that ails us, in about 5 years, will not be enough to stop the pain.
