Like Many Upstate Cities, Contracts Put Niagara Falls In A Bind

Niagara Falls Mayor Paul Dyster was already facing a tough budget year when he found out how much the city owed police brass and firefighters unions after an arbitration decision last spring.

While the city had set aside money for the possibility of back pay coming out of the decision, the amount was well below the $4 million that would need to be paid out.

“I think for us what was surprising was the total dollar amount of the payout when you applied those percentages through those contracts,” Dyster said. He ended up submitting a budget with a proposed 4 percent tax hike, layoffs and a reduction in services.

Niagara Falls is one of many upstate municipalities dealing with the challenge of keeping unions happy while maintaining services, as tax revenues are outpaced by growing costs.

Richard Ravitch, the former lieutenant governor who has been called in to help fix financial messes in New York City, the Metropolitan Transportation Authority and now Detroit, said that the issue is widespread.

“This is the universal problem we have all over the country,” Ravitch said. “We have all this pressure on the cost side to provide public services and public benefits and we have an enormous reluctance on the part of the people who can afford it to pay more taxes to pay for it.”

And there’s no easy solution for governmental leaders, particularly those running smaller, poorer cities.

“The guy who lives on Park Avenue doesn’t want to pay for anything in Niagara Falls,” Ravitch said. “But on the other hand, the people in Niagara Falls can least afford to pay the level of services necessary to provide the poor people with a minimal level of living.”

As jobs disappeared over the years, municipalities struggled to provide the level of services required to keep their communities running with a shrinking tax base.

In Niagara Falls, that has led to grass on some city-owned lots growing chest high during the summer.

Dyster points out that while the population shrinks, the streets still need to be paved and plowed and the same amount of ground needs to be covered by police and fire departments.

“Your city may have half the population that it did in the 1960s,” Dyster said. “It doesn’t mean the demand for services is half of what it was in the 1960s.”

In fact, as more people move out of the city, the vacant houses left behind attract crime and are far more likely to be set on fire than occupied homes.

Making matters worse, Dyster said, many of the people who left the city over the decades were upwardly mobile, educated people. Many of those who remained were poorer.

“At the end of the day, you end up with a city that maybe has a lot of poverty and therefore has a disproportionate crime rate by comparison to a city of the same size that’s more prosperous,” Dyster said.

Finding a balance among tax rates acceptable to his constituents, critical city services and legacy costs like the pensions and health care expenses of retired city employees is something the mayor of the poor city—half the residents live within 200 percent of federal poverty guidelines—has struggled to do in recent years. The city has used a total of $14 million in fund balance to bring the books in line in the last three budgets. The reserve is so depleted it is no longer a realistic option for plugging holes.

The city is again looking at a sizable bill for work already performed by its uniformed employees. The police patrolmen’s union, Police Club Inc., is set to enter into arbitration with the city this summer, and an award similar to those granted last year is expected late this year or in early 2016.

When going to the negotiating table with uniformed officers, politicians know that they are at a disadvantage from a public perception standpoint. Dyster says he understands that his uniformed officers have difficult jobs and deserve to be paid well.

“People understand the need for public safety,” he said.

Mike Lee, the president of the Police Club, agrees with Dyster on that point.

And he says it is his responsibility to get the best deal he can for his members, particularly considering the dangerous and difficult work that they do.

“I don’t think it’s my job to manage (the city’s) finances,” Lee said.

Lee, who took over as president in January after spending seven years on the union’s negotiating team, said he realizes that many upstate cities, including Niagara Falls, are facing tough decisions. But, he says, taking care of the people that keep the city safe should be a priority.

Niagara Falls is far from alone in struggling to deal with union contracts while contending with other fiscal challenges. The city puts about 80 percent of its general fund toward those costs each year, a number that is common for upstate municipalities.

Brian Butry, a spokesperson for the state comptroller’s office, said many counties, towns and cities across upstate face very similar challenges to Niagara Falls.

“We certainly stress that when officials are doing their long-term budget planning that they take these costs into consideration,” Butry said.

In 2012, the state comptroller’s office’s Fiscal Stress Monitoring System listed Niagara Falls as in “significant stress.” The city was taken off the list in 2013 after casino revenue payments that had been withheld for nearly four years were released. Still, the city’s recurring deficit and growing personnel costs remain worrisome to officials.

Dyster has been eliminating non-essential jobs after employees retire. Last year, with the budget negotiations extremely tense, the city offered a retirement incentive in an effort to reduce the workforce, ultimately eliminating 16 jobs.

“We’re trying, where possible, to reduce the size of city government through attrition,” Dyster said, adding that he is trying to maintain services on fewer dollars so that the city remains a desirable place to live, in the hopes that the population and tax base can rebound.

As tax bases have stagnated or declined, some unions have come to realize that they, too, need to consider the fiscal strength of the places they work in order to ensure long-term benefits for their members.

Finding that common ground can be a delicate balancing act, but one that both sides strive for.

As Butry said, “It’s in everybody’s best interest that you can work out a mutually beneficial agreement.”