LOCKPORT – The City of Lockport will ask the State Legislature today for emergency authority to try to borrow its way out of the red.
A special meeting of the Common Council has been called for 6 p.m. today to vote on a home rule request, without which the Legislature can’t act on the issue.
If it is approved, the city will be allowed to borrow $5.4 million, which Mayor Anne E. McCaffrey said is the total of its deficits for the years 2011 through 2013.
“We have these long-term multiyear deficits out there, and they have to be paid off,” the mayor said.
McCaffrey said the special law will allow the city to make a payment of only interest, not principal, during the first year of the 10-year bonding term. She said she didn’t know yet how much that payment would be.
The move was recommended by the State Comptroller’s Office in a Friday afternoon meeting with McCaffrey. Under the terms of the borrowing, the city’s budgets will need the comptroller’s review before they are passed for the next 10 years.
“This has been their suggestion, so we felt we should go ahead with it,” said Assemblywoman Jane Corwin, R-Clarence, who introduced the bill in the Assembly on Monday.
The $5.4 million figure was calculated by Mary E. Smith, the former Niagara County chief accountant who was hired in April as a $40,000-a-year financial consultant for the city.
Tonight’s Council meeting will include a public hearing on the measure, which is mandatory, although McCaffrey said the city is being allowed to waive the normal public notice requirement because of the emergency nature of the situation.
The emergency timing is caused by the State Legislature’s determination to end its 2014 session Thursday.
State Sen. George D. Maziarz said Monday night, “I’m going to introduce it in the Senate before midnight because it has to age three days before we can vote on it.”
Assembly passage will fall on the shoulders of Corwin, who said, “All indications are that it will be good.”
She said she has arranged for the bill to face only two committees instead of the usual four.
“Usually what they do in the Assembly is hold all the Republican local bills until the last 24 or 48 hours anyway,” said Maziarz, R-Newfane. “Jane’s well-liked over there. I think she can get it done.”
Maziarz said there is precedent for the Lockport deficit bonding. In 2007, the Legislature authorized $4.3 million in bonds for Olean to cover its accumulated deficit. That measure, like the one for Lockport, was recommended by the Comptroller’s Office.
“We found the Olean bill and just used it for Lockport,” Maziarz said. “We’ve done it for Yonkers before. Yonkers is always in trouble.”
According to affidavits filed by city officials in connection with a lawsuit against the Lockport Professional Fire Fighters Association, the city was expected to run out of money to pay its bills in August unless it was allowed to reduce fire service by cutting the number of firefighters on each shift and taking one ambulance and one fire truck out of service.
McCaffrey said the deficit bond issue will relieve the threat of default this summer. “It will keep the cash coming in so we can pay our bills,” she said.
But she said the borrowing does not address the predicted deficit for this year, which the city blames on higher-than-expected Fire Department overtime that would be relieved by the proposed cuts.
“We still need to reduce the Fire Department overtime,” McCaffrey said.
The sides are awaiting a ruling from State Supreme Court Justice Ralph A. Boniello III on whether the planned cuts violate the fire union’s contract and an order from a state arbitrator in a similar situation several years ago.
Fire Chief Thomas J. Passuite wrote in a court affidavit that if the city is allowed to, it will probably do away with its paid ambulance service altogether.
Boniello granted the union a temporary restraining order May 2, barring the cuts from taking effect.
The Comptroller’s Office became involved in Lockport finances last year. An audit showed the Common Council had been given false financial projections by the City Treasurer’s Office, which said the city had a small surplus at the end of 2012, when in fact it was more than $1.15 million in the hole. A private auditing firm, the Bonadio Group, in March blamed the poor performance of the Treasurer’s Office on understaffing.
Lockport was put on the state’s list of cities facing “moderate fiscal stress” Sept. 25, and on Oct. 2, the Council approved a $2.7 million short-term borrowing to get through 2013.
City Treasurer Michael E. White said last week the city has been approved for a $1.1 million emergency state grant because of its stressed situation.