NIAGARA FALLS, N.Y. – A state audit about Niagara Falls’ financial condition is critical of how the city spends money and warns that leaders are running out time to fix things.

Among the top items the audit recommends: Be less reliant on casino revenue, make a realistic budget, and come up with a multi-year plan that offers solutions to replenish the fund balance.

Mayor Paul Dyster doesn't disagree with the report's findings, but he says the Senecas' dispute with New York State that led to stopped revenue payments for host cities threw a wrench in things.

"We put in place a freeze on all unnecessary discretionary spending,” Dyster said, when Niagara Falls stopped getting the payments promised in a state compact by the Senecas.

But the Senecas’ sudden dispute doesn't take away from the fact that the state advised Niagara Falls to stop using casino money to balance budgets back in 2013.

“Well this is true, and the city has had the ambition to reduce the portion of casino revenues in the budget each year,” Dyster said. “But we were looking to basically reduce or phase out casino revenues by 2023, not 2017.”

Both Dyster and councilman Andrew Touma also defended casino revenue use because they say the other option was the raise property taxes, something they've tried to avoid doing in a city with many families on a fixed income.

Meanwhile, a change to benefits for city workers is on the table for Monday's agenda, and while Mayor Dyster says the benefit plans consolidate and save money by having workers contribute more, the deal still includes things like 12 paid holidays a year, one of which is listed as the employee's birthday, another two of which are listed as Lincoln's birthday and Washington's — as opposed to just one Presidents Day.

Another perk includes the option to convert accrued vacation time to a cash payment.

“How can you justify this considering the financial state?” 2 On Your Side’s Erica Brecher asked.

“Well, again we treat all of our workers the same. We would not negotiate a new contract with one union, but not another,” Dyster said.

He says Niagara Falls’ healthcare costs were among the highest in the state and believes these new contracts will change things.

Brecher presented the same outstanding items to councilman Touma, who co-sponsored the employee benefits changes, along with three other council members.

“I certainly wanted to be a sponsor on that. That doesn't mean I agree with everything that's in it, and certainly that's up for discussion on Monday,” Touma said.

What it comes down to is that the city needs to make budget cuts while also generating more revenue. The casino payments have stopped for now, and the city’s new hotels have tax incentives that will last for the next several years.

“What, right now, in the City of Niagara falls can you rely on to be revenue generating?” Brecher asked.

"We've created more parking revenue in the past three years than we did in the past 10 or 15 years,” Touma said. "Three years ago, we were averaging half a million dollars in parking revenue. Now it's $1.2 million."

Touma said Niagara Falls also relies on annual state aid from New York, which he said is about $19 million.

“The unfortunate thing, Erica, is that hasn't changed for seven or eight years,” Touma said.

Touma also pointed out that Niagara Falls is the host city to both the Niagara Parks Commission and the Bridge Commission, and that maybe it's time to ask those groups for a larger share of revenue.