NIAGARA FALLS, N.Y. - One of the nation's most influential credit-rating agencies downgraded the credit outlook of the City of Niagara Falls to "negative" on Tuesday, a direct response to the financial uncertainty created by a casino revenue dispute between the Seneca Nation and the state of New York.
Standard & Poor's did not lower Niagara Falls' actual bond rating, but it changed the outlook from "neutral" to "negative," meaning the agency is concerned about the future of the city budget.
"It seems unfair to us, that we have to worry about our bond rating potentially being downgraded in the future," Niagara Falls Mayor Paul Dyster said, "when the dispute basically has nothing to do with us."
Since 2002, the Seneca Nation has shared millions of dollars in revenue each year with the state, which in turn funnels some of the money to the cities of Niagara Falls, Buffalo and Salamanca. However, the Seneca Nation maintains the original agreement no longer requires it to give the state a cut of the money, so starting this summer, the cities no longer received their quarterly payments from the state. The Seneca Nation has long argued that it's the state's responsibility to pay the municipalities.
Gov. Cuomo's office, which strongly disputes the Seneca Nation's interpretation of the 2002 compact, did not respond to requests for comment on Tuesday afternoon.
Seneca Nation President Todd Gates, however, said he's still working toward scheduling a meeting with Gov. Cuomo this summer. An agreement is critical not only for Niagara Falls but also for Buffalo and especially Salamanca, which relies on casino revenue for 60 percent of its entire operating budget.
"We've talked to all of our local representatives, and they want to get it done. We're looking at a path forward," Gates said. "We can all come out on the winning side of this."
Despite the S&P downgrade, Dyster said he is expecting Fitch -- another major credit-rating agency -- to release a report showing the city has a stable outlook and no change in bond rating.
Dyster also said the S&P report indicated that Niagara Falls' credit outlook would improve again if the state and Seneca Nation strike a deal. The report also showed that the city has high liquidity, or, in other words, a lot of cash available at the moment.
It's the future outlook that S&P worries about. About 10 to 15 percent of Niagara Falls' budget relies on casino revenue in a typical year.
"I think it's important this question of casino revenues not become politicized," Dyster said. "Because it has so much to do with the long-term economic future of our region as a whole."
Dyster, however, sides with Gov. Cuomo's interpretation of the compact.
"We, like the state of New York, believe the Senecas are obligated to make these payments to the state of New York, and New York is obligated in turn to make payments to us," Dyster said.
But President Gates won't back down from his own interpretation.
"Our obligation ended," Gates said. "But we'd like to help our neighbors and move forward."
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