New York State is preparing to give Niagara Falls a $58 million loan to compensate for the loss of revenues from the Seneca Niagara Casino, an urgent development in a problem brought on, at least in part, by New York State.
But while the loan eases the immediate problem, it also creates another: How will Niagara Falls ever make good on the loan? The truth is, the city can't. This had better be one of those famous New York State loans that no one expects to be repaid.
The crisis arose because the Senecas have withheld money owed to the state and several cities, including Niagara Falls, on the plausible complaint that the state violated the agreement with the Senecas by allowing non-Indian gambling within the exclusivity zone.
Thus, Niagara Falls is on the brink of a fiscal cataract. A $58 million deficit is more than significant. It's calamitous and the city had no control over it. The dispute is between the Senecas, whose casino operates within the city, and New York State. But Niagara Falls – and Buffalo and Salamanca, the other cities hosting casinos – are paying.
This has always been New York's problem to solve. It would be intolerable for the state simply to watch as Niagara Falls failed to make payments when the problem was caused by a dispute between the state and the Senecas. Although the Senecas once offered to make payments directly to Niagara Falls, the state refused the accommodation, and later the Senecas backed away from that idea, anyway.
Leaders in Niagara Falls appealed for help from Albany earlier this year and got a lukewarm response. Now, though, the state is considering a loan, according to Assemblyman John D. Ceretto, who represents the Falls.
Albany needs to pony up this money, but with the understanding that Niagara Falls cannot repay it. The dispute between the state and the Senecas is headed for arbitration. If the state wins, the Senecas will pay the money they've held in escrow, the state will be made whole and the loan will be forgiven.
If the state loses, then its actions in sanctioning gambling in Hamburg and Batavia will have been the cause of the Falls' problems. And that means the state should be on the hook for the money the city should have received in the past and is due to receive in the future.
First things first, though. Albany needs to stop dragging its feet and get this money to the Falls. That will stanch the bleeding. Afterward, we will see exactly where the chips fall in this expensive dispute.