The New York State Comptroller’s Office has warned that the city of Niagara Falls could see a serious shortage of finances as a result from a prolonged dispute between state officials and the Seneca Nation of Indians.
In February, the Senecas stopped contributing slot machine revenue to the state. Payments to host communities also stopped and auditors believe that if the issue remains unsolved and the city fails to find new revenue sources quickly, it could find itself in the middle of a serious budget impasse in the coming years.
A recent report by the Comptroller’s Office showed that Niagara Falls has been filling budget gaps with $9 million in casino revenue contributions each year since 2014. The city is home to Seneca Niagara Casino & Hotel and as such, has received slot machine revenue from the tribe each year for the past fourteen years.
Under a 2002 compact between the state and the Senecas, the nation paid a 25% portion of its annual slot machine revenue from its three Western New York casinos. The money was split between the state coffers and the host communities.
According to the state Comptroller’s Office, Niagara Falls has become highly dependent on said revenue contributions and this could harm its financial stability. The office’s recently published audit showed that the Niagara Falls’ casino fund has shrunk from almost $44 million in 2013 to a little over $25 million as of May 31, 2017. Auditors have warned that the city could be out of casino finances by the end of 2018. City officials were recommended to quickly come up with new revenue sources.
Commenting on the latest findings and recommendations, City Mayor Paul A. Dyster told local news outlet Buffalo News said that the city is not in the position to run out of finances as quickly as suggested by auditors. The official admitted that Niagara Falls has certainly had better times but that they believe they have adequate reserves at their disposal and until the dispute between the Senecas and the state is resolved.
What Triggered the Dispute
Since 2002, when the compact was penned, the Senecas have been contributing around $100 million in slot machine revenue to the state. However, the compact expired on December 31, 2016 and tribal officials announced in February that their casinos will no longer share casino revenue with New York.
It became known that the decision was prompted by the recent opening of three commercial casinos in Upstate New York. One more such gambling venue is set to open doors early next year. According to the Seneca Nation, New York has violated its part of the compact by allowing commercial facilities and thus breaking the tribe’s exclusivity.
State officials, on the other hand, believe that the three tribal casinos should continue paying their due as the compact has been automatically renewed. They explained that under a provision in the original agreement, it would be renewed automatically for a period of seven years if neither of the parties had raised objections to whether it had been observed strictly.
