People look out at the New York City skyline at sunset, Sunday, June 16, 2024, in Jersey City, N.J. (AP Photo/Julia Nikhinson)
New York City’s fiscal crisis of almost a half-century ago is worth revisiting for a number of current local leaders and school board members who have yet to see or worry about the potential writing on the wall. While state and regional home sales and growing sales tax receipts have offered reason for optimism around the area, there is no doubt the cruise-control ride will get bumpier.
Governments and schools are not in the business of looking to the future. Instead, they both budget on an annual basis. Though those elected may sense a disaster on the horizon, many who serve wait for the emergency to arrive before reacting.
As population and enrollment decreases at all levels in Chautauqua County, the burden becomes greater on the residents the entity serves. COVID-19, while taking a toll on both our physical and mental health, was a boon to municipalities and schools. Swaths of magic money that began to disappear this year led to complacency by those charged with watching the bottom line.
It was comparable to the situation in the Big Apple in 1975.
As noted by the Rockefeller Institute of Government in an article on its website in 2022, one of the major contributors to the $13.5 billion financial debacle was “inadequate oversight.” Later that fall, the New York State Legislature enacted the Financial Emergency Act that required a four-year financial plan.
“These good practices help alleviate the financial risks that cities face,” Dall Forsythe, budget expert on the Emergency Financial Control Board, told the Rockefeller Institute. “Such planning practices are critical for dealing with economic realities such as the ups and downs of the business cycle and their impact on economically sensitive revenues. The city has a lot of economically sensitive revenues — now much more than it did before the fiscal crisis.”
Similar to what is happening in Dunkirk, the state became involved with New York City once the municipality realized it could no longer borrow from banks to pay the bills. That unfortunate bailout only fortified the divide and animosity that exists between upstate and downstate.
In the end, New York City in the disco-era 1970s was a lot like the big banks during the 2008 housing recession. It was too big to fail.
That is not the case with every government. When the former village of Forestville eyed a potential 400% increase in property taxes in 2014, it started the wheels turning — very quickly — toward a dissolution that was approved twice.
Dunkirk, however, is still in the early stages of its emergency. The north-county entity, which is running a deficit of nearly $16 million, is home to about 12,000 residents and a budget of $26 million annually.
Numbers revealed at this month’s Finance Committee meeting give scary insight into the severity of the deficit. While expenses totaled $3.8 million, there was only $837,000 in revenue.
Major property tax and water-rate increases that loom for 2025 seem to be a couple of ways for the city to increase its coffers. But those decisions will come with tremendous consequences.
First, it will be a hit on property owners. Dunkirk already has a poverty rate that is 25% and a median income of $46,800. Those numbers indicate a lack of prosperity.
Second, it makes working with neighboring entities even tougher. Consider neophyte Dunkirk Town Board member Phil Leone’s anti-consolidation sentiments in May: “I don’t think our constituents understand what consolidation would mean as far as taxes increased. All of these towns seem to be in the red. We’re not in the red.”
That is shortsighted. Currently, the town purchases its water through the North County Water District, which is supplied by the city of Dunkirk. In addition, the town also has agreements for policing with the city and shares a town highway superintendent with the town of Sheridan.
While the town may be financially stable, it definitely is able to take advantage of consolidated efforts to keep costs down. In that aspect, Leone’s comments are hypocritical and a bit arrogant.
His fears, however, are legitimate. Dunkirk’s fiscal crisis has done damage when it comes to current municipal partnerships — and potential ones in the future. Even though it’s not being discussed publicly by the Village Board, Fredonia’s fears of eliminating its own water system are increased because of the instability of its Central Avenue neighbor.
Farther west, the Chadwick Bay Intermunicipal Water Works — made up of five entities — appears to be on the verge of falling apart. The billing agency for the North County Water District and is facing mounting criticism from the town of Portland and village of Brocton with both threatening to leave the partnership that includes three other municipalities. Though this situation does not directly involve the city of Dunkirk, the connection remains since it is the sole supplier of water to the north county district.
Many, including city residents, have been soured by Dunkirk’s money dilemma. Progress in getting leaders to work together was already slow. This could be one more impediment to future joint efforts.
John D’Agostino is the editor of The Post-Journal, OBSERVER and Times Observer in Warren, Pa. Send comments to jdagostino@observertoday.com or call 716-487-1111, ext. 253.