Salamanca to be advanced $5 million from state for city budget

SALAMANCA — As the Salamanca Common Council approved its tentative budget for 2020-21, the aldermen and mayor breathed a collective sigh of relief knowing additional funds were on their way.

The city is expected to receive an advance loan of up to $5 million from New York state to help meet expenses next year’s budget, Mayor Michael “Smitty” Smith shared Feb. 12 before the council meeting.

The council unanimously approved a tentative $10.4 million budget that night.

At about 5 p.m. Smith received an email from the New York State Division of the Budget informing him the state will advance the funds “to reflect any delay in the resolution” of the Seneca Nation of Indians’ gaming compact arbitration ruling.

“As we wrap up our budget session for 2020-21, we don’t have to worry about running out of money,” the mayor said during the meeting. “It’s really good news, really great to hear.”

Chief Budget Examiner Jesse Olczak told Smith in the email that the state is appreciative of “the city’s ongoing efforts to mitigate the local impact of the financial disruption” caused by the compact breach.

“While the state cannot continue to fill in for the Seneca Nation’s failure to comply with their obligations indefinitely, we understand that deadlines are approaching for the adoption of the city fiscal year 2020-21 budget,” Olczak said.

In April 2017, the Seneca Nation suspended payment of revenue sharing to New York state required by the Nation-State Gaming Compact. This has been an approximately $5 million blow to the city’s revenue streams from the state each year.

An arbitration panel ruled in 2019 that the Seneca Nation has a compact obligation to continue the revenue sharing payments and was ordered to pay approximately $250 million in withheld revenue, which the state distributes to surrounding communities.

“Unfortunately, the Seneca Nation has failed to comply by the ruling, cutting a critical funding source to the city,” Olczak said.

In the fall of 2019, the state advanced the city a $4.7 million loan to help meet the current budget’s expenses as well.

Smith recognized City Comptroller Kathi Sarver for the all accounting and paperwork she had to do while working with the state in order to show the city needed the funds to get by.

“She’s been working hard and really pulled this off,” he added.

As with the 2019-20 advance, the payment would be deemed an advancement of future expected Seneca revenue sharing payments owed to the city, so it would be deducted against such revenues from the Nation.

“We will work with Kathi Sarver to understand your city’s cash flow needs to determine when payments are needed to avoid disruption in city services,” Olczak said.

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