Property taxes would remain nearly flat under Mayor Paul A. Dyster's proposed $93 million budget for 2009 that uses a shot of leftover state aid to help offset a spending increase of 5 percent.
Dyster presented his first budget to the City Council on Wednesday with a warning that turmoil in the state and national economies leaves several "issues of great uncertainity" that could affect the city.
"I cannot help but caution that what we are now experiencing may be 'the calm before the storm,' " Dyster said.
Among the uncertainities is what the state will do with a state aid program -- known as Aid and Incentives to Municipalities -- that then-Gov. Eliot L. Spitzer had promised to expand and that has been a steadily increasing revenue source for the Falls in recent years.
The proposed budget assumes that state aid will increase slightly and also relies heavily on $3 million in state aid the city had from previous years when it received more than budgeted.
If state aid to distressed cities is cut when the Legislature finalizes the budget in the spring, that could leave a hole in the city's budget.
State aid makes up 18 percent of the city's total budget and is the second-largest revenue source behind local property taxes.
"We know the financial situation with the state, as well as the federal government, but we can only plan on what we know right now," said Councilman Chris Robins. "And we've been told that it's reoccurring."
The city had saved unexpected state aid increases that it received in recent years to help reduce or eliminate rising taxes during a three-year period. The city will have $2.9 million of that money left after 2009 under the proposed budget.
"Hard decisions are coming down the road because we've got to wean ourselves off that money," City Controller Maria Brown said.
Several Council members praised Dyster and Brown for putting together a budget that would keep taxes nearly flat.
City property taxes for both residential and commercial properties would increase less than one-tenth of a percent.
"It will be our third year now with a zero tax increase," Council Chairman Sam Fruscione said. "All we're going to do at this point is to review the budget and see if there's any way possible we can make it into a tax decrease."
The proposed homestead tax rate is $16.89 for every $1,000 of assessed value of a home. At that rate, the owner of a property worth $60,000 -- about the city's average -- would owe $1,013.
The proposed nonhome-stead tax rate is $32.92 for every $1,000 of assessed value. A similarly assessed commercial property would owe $1,975.
Dyster said the proposed budget reduced or froze noncontractual spending to avoid raising city taxes.
The budget was also affected by a $10 million drop in the assessed value of all taxable property because of changes by the state in the way utilities are taxed and the demolition of vacant industrial properties.
The proposed budget would add several new jobs, including a grant writer whose $50,000 salary would be paid through casino revenue, a full-time equal-employment opportunity officer, a part-time housing inspector, and four cleaning and maintenance employees who will work in the new public safety building when it opens next year.
Seven police officers who had been paid by the state court system to provide court security will also now be paid by the city and will be assigned to duties within the Police Department, Brown said.
The Council will spend the next two months reviewing the budget with department heads and can cut spending lines in the budget, prompting Fruscione to say, "There's always room to cut."
Niagara Falls revenue stream
Mayor Paul A. Dyster has proposed a $93 million budget for 2009. The budget is fed by several revenue sources here are the largest:
*Local taxes: 32 percent
*State aid: 18 percent
*Sales tax: 14 percent
*Casino revenue and Power Authority settlement: 6 percent*
*Most of the casino revenue is spent outside of the ciy's annual operating budget.