A new audit from the state comptroller's office is criticizing the budgeting practices in Niagara Falls.
The audit says the dispute over casino revenue being withheld from the city by the Seneca nation has hurt the city's fiscal situation, but government worsened things.
According to the report, city officials used nearly $22 million of its rainy day funds for operating costs from 2009 through 2013.
"Niagara Falls has nearly exhausted its resources to avoid a fiscal crisis. City officials cannot continue to walk a financial tightrope for much longer," State Comptroller Thomas P. DiNapoli said. "While the dispute over gaming revenue is significant, the city's budget challenges also stem from a number of socio-economic factors including population loss and a high unemployment rate. The mayor and the city council are actively trying to manage their considerable hurdles, but getting on firmer financial footing will require a resolution of casino gaming issues and likely even greater assistance from the state."
In 2013, the city's budget decreased nearly $5 million from the prior year, but still incurred a structural deficit of $12 million. The spending plan also included the use of $2 million of unavailable fund balance; $2.9 million in transfers from the capital projects fund; $850,000 in transfers from the debt service fund; and $1 million from property sale revenue.
DiNapoli's audit also reviewed the city's information technology (IT) systems. The findings included:
· The city implemented IT policies and procedures, including a computer use policy, but has implemented adequate controls and restrictions over user access to the financial system;
· The city has not developed adequate procedures for data backup and storage; and
· The city has not adopted a formal disaster recovery plan that includes policies and procedures to help prevent or minimize the loss of computer equipment and data.
DiNapoli recommends city officials:
· Establish policies and procedures for access controls to restrict financial software permissions to only those functions that are necessary for employees' job duties;
· Designate someone independent of the city controller's office as the city's financial system administrator;
· Ensure that logs for the financial system are maintained and periodically reviewed; and
· Establish policies and procedures for data backup and storage, and comprehensive guidelines for disaster recovery.
Falls Mayor Paul Dyster is firing back at the auditors, saying it's ironic that the state is criticizing the city's finances when the state dispute with the Senecas has caused most of their problems.
For access to state and local government spending and more than 60,000 state contracts, visit http://www.openbooknewyork.com/. The easy-to-use website was created by Comptroller DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.
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