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DiNapoli: Niagara Falls, Salamanca facing dramatic revenue shortfalls

by jmaloni

Press release

Mon, Dec 10th 2012 11:30 am

Cities challenged by high poverty, unemployment rates

The cities of Niagara Falls and Salamanca continue to be hampered by population loss, decreased property values and a significant decline in revenue, according to two fiscal reports issued Monday by State Comptroller Thomas P. DiNapoli. The reports are the first in a series of fiscal profiles on cities across the state.

The reports detail the impact of the ongoing dispute over casino revenue on the two Western New York communities. The cities are home to casinos operated by the Seneca Nation - the Seneca Niagara Casino and the Seneca Allegany Casino. Niagara Falls and Salamanca have not received their "local share" of casino revenues since 2009, when the Senecas halted gambling compact payments to the state. To date, Niagara Falls has been deprived of $60 million in casino revenues. Salamanca had been receiving more than $3 million annually as part of the compact.

"Niagara Falls and Salamanca face more severe stresses than most other cities in the state, and the loss of casino revenue has exacerbated their problems," DiNapoli said. "City officials have been forced to make drastic budget cuts, spend down reserves and seek emergency aid from the state. Unfortunately, the systemic fiscal problems that have plagued these communities cannot be properly addressed until casino gaming issues are resolved."

In Niagara Falls, the city has struggled due to a number of socio-economic factors, according to the comptroller's report.

At its peak in 1960, Niagara Falls' population was 102,394. By 2010, the city had lost 51 percent of its population, the largest percentage drop in population for any city in New York during that time frame.

Currently, 17.6 percent of families in the city live in poverty and the city's unemployment rate (11.4 percent) is significantly higher than the statewide average for cities (8.2 percent).

Other findings in DiNapoli's report include:

•Niagara Falls has exhausted 76 percent of its constitutional debt limit and has $73.8 million in outstanding debt.

•Nearly 14 percent of properties in Niagara Falls are vacant and another 44.8 percent of property in the city is listed as tax-exempt.

•The median home price in Niagara Falls is $65,400, far below the median city's price of $96,000.

"The City of Niagara Falls commends Comptroller DiNapoli for this independent assessment of the fiscal issues facing our community," said Niagara Falls Mayor Paul A. Dyster. "The challenges raised in this report present major hurdles for our city. But we remain optimistic that our economic development activities, which are vital to attracting new business investment and new visitors to the city, will be accelerated once the state's dispute regarding casino revenues is settled. By reestablishing this vital revenue stream, Niagara Falls can begin to reverse the negative trends cited in Comptroller DiNapoli's report. My administration will continue to work with Comptroller DiNapoli as we continue our efforts to redevelop our city."

In Salamanca, city officials are similarly coping with a drop in revenues, a stagnant tax base and an increasing number of families living in poverty.

In 2010-11, the city nearly depleted its fund balance after suffering a 25 percent decline in revenue. The following year, city officials used a one-time advance of $5 million in state aid to cover operating costs and debt payments, but the city now faces a $2.5 million shortfall and could run out of cash before the end of the current fiscal year.

The report also noted:

•Since 1950, Salamanca has suffered a 34 percent decline in population and is now the fourth smallest city in New York, with 5,815 residents.

•With much of the city's property located on the Allegany Territory of the Seneca Nation, Salamanca has the second highest number of tax-exempt properties in the state (62 percent).

•More than 15 percent of families in Salamanca are living in poverty.

•The median income in Salamanca of $32,741 is well below the state median of $55,603.

"The demands on city government did not go away when casino revenues did," said Salamanca Mayor Jeffrey L. Pond. "The city is still responsible for ensuring public safety, maintaining roads and providing essential municipal services. Our sustainability, however, has been complicated by the loss of these revenues and the continued erosion of our tax base. Comptroller DiNapoli's report details why it so difficult to balance our budget and pay for the vital services that our residents depend on."

In the coming months, DiNapoli will issue fiscal profiles on select cities across the state to further inform officials and citizens on some of the unique environmental and systemic pressures facing New York's cities. As part of this effort, DiNapoli will also release in-depth reports on some of the issues that contribute to the financial pressures on local governments.

In September, DiNapoli's office unveiled details of a new fiscal monitoring system that will calculate and publicize an overall score of fiscal stress for municipalities and school district across the state. The "early warning" system will identify those headed toward fiscal crisis and give local officials and the public sufficient time to consider options for turning things around. DiNapoli recently completed the process of receiving comments from local officials about the process.

The monitoring system was announced in conjunction with a report examining the demographic and financial trends of New York's 61 cities (excluding New York City) over the past three decades. The report found that many cities are struggling to balance budgets and revitalize deteriorating local economies.

For a copy of DiNapoli's report on New York's cities, visit: http://www.osc.state.ny.us/localgov/pubs/fiscalmonitoring/pdf/nycreport2012.pdf

For a copy of DiNapoli's fiscal monitoring system plan, visit:
http://www.osc.state.ny.us/localgov/pubs/fiscalmonitoring/pdf/fiscalstressmonitoring.pdf

For a copy of the Niagara Falls profile, visit: http://www.osc.state.ny.us/localgov/pubs/fiscalprofiles/niagarafalls.pdf

For a copy of the Salamanca profile, visit:
http://www.osc.state.ny.us/localgov/pubs/fiscalprofiles/salamanca.pdf

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