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In cash crunch, Falls officials trying to avoid layoffs; Halt in casino revenues hurting city as mayor faces $6 million budget hole

In the midst of a cash-flow problem created by held-up revenues from the Seneca Niagara Casino, city officials worked this week to stave off the possibility of layoffs in city government.

Days after talk circulated about the possibility of job losses, Mayor Paul A. Dyster said layoffs are "not imminent" despite a cash shortfall of nearly $6 million.

"Layoffs are kind of a last resort," Dyster said. "They'd be absolutely the last thing we would go to."

Dyster's administration has been adhering to a spending freeze imposed by the City Council April 2. Council members at that night's meeting rejected $44,000 in spending requests, and Council Chairman Sam Fruscione said officials have been working on more "creative budgeting" to find savings.

"I'd rather have employees than icing on the cake," Fruscione said.

The mayor, along with City Controller Maria C. Brown, has also sought to move the salaries of the seven-member economic development department off the casino revenue budget line and into the city's general fund.

Money for the salaries will be gradually made up through unfilled retirements, departmental consolidation and money saved during the spending freeze, city officials said.

City officials said between two and three members of the economic development department would be shifted onto the general fund payroll soon. The other 4 1/4 positions will be gradually moved to the general fund as the city builds savings and city employees retire.

"What we typically say is look at every dollar that goes out the door, and if it doesn't need to go out the door, don't spend it," Dyster said.

The cash-flow problem was created when up to $50 million in revenues from the casino, paid by the Seneca Nation of Indians through the state, were not paid to the city for the last two years as the state and Senecas disputed terms of a gambling exclusivity agreement. Casino revenues from years past have since run out.

With the revenues held up, the city funded projects slated to be paid by casino revenues with the city's special projects fund balance and reserve fund, which has since dwindled from $20 million to $9 million.

Fruscione has sought to portray Dyster's administration as a spend-thrift operation, pointing to two previous spending freezes the Council enacted.

But Dyster this week defended the city's plan for spending casino revenues on infrastructure improvements, debt and public safety payments, property tax losses and economic development projects like the Niagara County Community College culinary institute and events programming along Old Falls Street.

"They've been spent in accordance with a plan," Dyster said. "I think you can show a lot of progress in the community. We feel pretty good about what we've done."

He said the economic development salaries, which totaled more than $1.1 million in 2011, were funded by casino revenues in an attempt to prevent funding by taxpayers.