City officials received a clean grade on financial records for the year ending March 31, although they had to borrow $5 million to make up for a shortage in casino revenues.
Auditors from R.A. Mercer & Co. of Orchard Park presented details Wednesday saying the records conform with auditing standards.
The budget expenditures ending March 31 were $7.8 million, compared with the 2010 amount of $8.5 million. That includes a decrease in state aid of $3.3 million.
Since 2004, with the construction of the Seneca Allegany Casino in the city, the city has received income from the state as a result of the Gaming Compact with the Senecas.
The state pays communities where casinos are located -- Salamanca, Buffalo and Niagara Falls -- an exclusivity fee to offset the impact of the casino on those municipalities.
In 2010, the Seneca Nation said the state violated the compact by allowing others to engage in Class III gambling within their exclusivity area and began withholding those payments to the state.
Around 40 percent of the city's budget is based on these funds and when the payments stopped, the city was forced to lay off 49 workers last September and to curb other services.
As a result, the city is operating during the current budget year with an austerity budget, which provides a minimum of city services.
Recently, the state provided the city with a $5 million interest-free loan to pay a revenue anticipation note on land the city purchased and to fund city operations for the rest of the fiscal year.
The city is heavily dependent on casino funds. For 2011-12, the city anticipated $6.2 million compared with $8.3 million for 2010-11.
State revenue, including casino funds, represented zero percent of the city's revenue for the year ending March 31, compared with 66.3 percent for the year ending March 31, 2010.
The audit indicates the city's fund balance as of March 31 was $740,904.
In other matters, the Council approved creating a budget of $27,000 for a new police patrol car, at a state bid. It will be paid through bank financing.
Mayor Jeff Pond reappointed William Hunt to a five-year term on the city's Board of Assessment review through Sept. 30, 2016.