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Frank Soda 11/30/17 Niagara Gazette Guest View

Niagara Gazette Nov 30th 2017
GUEST VIEW: What questions should we ask the city council?

The general election is finally over. The voters have chosen their elected representatives. The political mail has finally stopped. The membership of the city council is now set for the next two years.

All too often, in recent political rhetoric, we’ve heard the usual simple cures for the complex problems that face our community. All city government must do is reduce its size; cut taxes; improve the quality of life; attract new jobs; and “grow” the tax base. Once that has been done a new era of prosperity will certainly arrive.
Unfortunately, in none of the campaign platforms presented this year has there been any specific detail about the process necessary to actually implement these measures. The basic question that must be asked of all members of the city council might be stated in this manner: “With all of the proposals for improving conditions in Niagara Falls, what will you do during the next year to actually close the gap between what city government spends and what it realistically receives as revenue?”
It is an undeniable fact that since the last settlement of the casino revenue dispute in 2013, total annual operating expenses included in the city budget have regularly exceeded total annual revenue. In 2014 the city overspent its revenue by approximately $8.7 million; in 2015 it overspent by about $4.8 million; and in 2016, even with $13.5 million of transfers from other funds, overspending reached approximately $2.3 million.
To me, this behavior begs another even more direct question: “What services should city government provide; who should pay for them; and by what method?”
As a former member of the Niagara Falls Financial Advisory Panel, I participated in a year-long study of the city’s budgetary and financial practices. From records provided to the committee, it was determined that between 2014 and 2016 the tax levy had increased by slightly more than $1 million; much less than the rate of inflation. While proposing to hold down the tax levy as a method of stimulating economic development may be a current principle of populist politicians, nevertheless, the reality is that during this same three year period the value of all homestead properties in Niagara Falls increased by only $1.1 million.
On the other hand, the value of non-homestead properties decreased by about $10 million thus resulting in tax increases for this property class.
Regarding this revenue result, I would conclude that unnecessarily restricting the tax levy was not the appropriate method for stimulating meaningful economic development in Niagara Falls. What actually occurred from the city’s attempts to hold down the tax levy is that, in 2017, the owner of a home within the city’s median value of $68,200 paid $8.18 less in property taxes than was paid in 2014; the owner of a home assessed for $100,000 paid $12.00 less. On the other hand, the typical small business owners of properties on Main Street, Pine Avenue, Niagara Street, and Buffalo Avenue have seen their annual tax bills increase by anywhere from $252 to $370 for 2017 in order to make up for lost assessed value in this property class.
Even if the non-homestead assessed value had remained the same for the past three years, the additional $1.6 million in revenue would have been far less than the $5.3 million average annual overspending that has occurred during the last three fiscal years. In 2017, the City of Niagara Falls has a reasonable expectation of receiving approximately $74 million from “reliable” revenue sources (generally referred to as “recurring” revenue), but a budget authorizing a little more than $90 million in operating expenses was adopted. How is this possible? This year’s city budget was “balanced” through the traditional practice of transferring monies from other “non-recurring” sources which in 2017 amounts to almost $16 million. Another question to ask the members of the city council: “Why doesn’t the city budget balance without revenue transfers from other funds?”
Quite possibly the lack of significant economic development in Niagara Falls may be the result of more complex conditions such as this being a community where: (1) 25 percent of the adult population is not in the workforce due to retirement, chronic unemployment, disability, or single parents raising children; (2) the available workforce does not possess the skill set that attracts those so-called “high tech” companies that pay upper-middle class wages; and (3) the city’s delivery of basic services and the level of basic services have not been analyzed for decades as to their effectiveness and efficiency.
There might be one last question to ask any of the city council members you happen to encounter: “Have the budget practices of the mayor and city council and the spending practices of city departments attempted to address any of the obstacles to real economic development in Niagara Falls?”
Frank A. Soda is a city resident and a former member of the Niagara Falls Financial Advisory Panel