By Daniel Okafor
BUFFALO — As town boards and city councils across Western New York write their 2027 budgets this fall, the state’s own early-warning system offers a mostly reassuring picture of the region’s local finances, with two glaring exceptions: one city that is in the worst shape of any local government in the eight-county region, and a list of 21 municipalities the state could not grade at all because they did not file their books on time.
The latest Fiscal Stress Monitoring System report from State Comptroller Thomas P. DiNapoli, covering local fiscal years that ended in 2025, designated the City of Dunkirk in “significant fiscal stress,” the most severe of the system’s three categories. Dunkirk’s score of 71.7 out of a possible 100 was the highest in the region and the fourth-highest of any municipality scored statewide, behind the Village of New Hempstead, the City of Albany and the Town of Kent.
Only one other Western New York municipality, the Village of Alexander in Genesee County, received any stress designation. Of the 253 counties, cities, towns and villages in Erie, Niagara, Chautauqua, Cattaraugus, Allegany, Genesee, Orleans and Wyoming counties that appear in the comptroller’s full scoring worksheet, 230 received no designation.
The other 21, including the cities of Jamestown, North Tonawanda and Salamanca, are listed as “not filed,” meaning the state had no current, complete financial data to score.
“Local governments are facing increased fiscal pressures due to a combination of the end of federal pandemic aid, higher inflation, rising operating costs and moderating sales tax revenue growth,” Mr. DiNapoli said when he released the scores in September. “Local officials should be pragmatic when planning future budgets, and I encourage them to use the FSMS information and tools we provide to help them make prudent financial decisions.”
How the scores work
The comptroller’s office launched the system in 2013. It scores each local government outside New York City on nine financial indicators drawn from the annual financial reports municipalities are required to file: year-end fund balance, operating deficits, cash on hand, short-term cash-flow borrowing and fixed costs such as payroll, benefits and debt service.
Points are added up to a score from zero to 100. A score of 65 or more is “significant fiscal stress,” 55 to 64.9 is “moderate fiscal stress” and 45 to 54.9 is “susceptible to fiscal stress,” according to the comptroller’s scoring manual. The office also publishes a separate “environmental” score based on population change, poverty, unemployment and reliance on state and federal aid, which measures pressures a municipality cannot easily control.
Statewide, 22 municipalities were designated in fiscal stress for fiscal year 2025, down from 23 a year earlier. But the number in the significant category rose from four to six, and the number of cities in any stress category doubled from four to eight. The report said 16 percent of the state’s cities that filed were in stress, the highest rate since 2021. No county in New York has been designated in stress for five straight years.
Dunkirk’s numbers
Dunkirk’s designation comes after years in which the state could not score the city at all. The report notes that Dunkirk had not received a score since fiscal year 2018 because it did not file its financial data in time.
The worksheet behind its 71.7 score shows why it landed at the top of the scale. The city maxed out both fund balance indicators: its general fund ended 2025 with an assigned and unassigned fund balance of negative $15.2 million, against general fund spending of about $21.7 million, a deficit equal to roughly 70 percent of a year’s spending. Its total general fund balance was negative $7.6 million.
The city also ran operating deficits in each of the three years the system examines: about $4.0 million in 2023, $3.9 million in 2024 and $3.1 million in 2025 across its combined funds. And at the end of 2025 it held about $4.7 million in cash and short-term investments against roughly $21.7 million in current liabilities, earning the maximum points on the cash ratio indicator.
Albany has already stepped in twice. The fiscal year 2025 state budget included the City of Dunkirk Fiscal Recovery Act, Part DD of Chapter 56 of the Laws of 2024, which authorized the city to issue up to $18.5 million in deficit financing. According to the comptroller’s report, Dunkirk did not issue any of that debt. Instead, the state provided the city a loan of up to $13.7 million through the City of Dunkirk Revenue Anticipation Note Refinancing Act, Chapter 183 of the Laws of 2025.
‘Alarming stuff’
The city’s own officials have described the situation in stark terms this fall, according to reporting by the OBSERVER of Dunkirk.
At a Common Council Finance Committee meeting in September, city Comptroller Tracy Smith-Dengler, who took the job in July, called the city’s cash position “alarming stuff.” She said Dunkirk had about $7.2 million in the bank, enough to cover payroll through April.
“Right now the city of Dunkirk does not have enough money to see us through to our next (major) revenue source,” Ms. Smith-Dengler said, referring to city tax collections in spring 2027, the newspaper reported.
She has pushed to move the city’s tax collection date earlier than May. When City Assessor Erica Munson noted that some residents already struggle to pay on the current schedule, Ms. Smith-Dengler replied, “I understand those dynamics. I’m looking at cash flow. We don’t have any,” according to the OBSERVER. The city’s fiscal affairs officer, Ellen Luczkowiak, said at the same meeting that Dunkirk was not in a position to issue another revenue anticipation note.
Ms. Smith-Dengler said prior administrations had not met their fiscal responsibilities. “We either close down and declare bankruptcy, or shift gears,” she said.
Asked by the newspaper afterward whether bankruptcy was an option, Mayor Kate Wdowiasz told the newspaper, “I think at this point it’s not off the table because the council is still refusing to take action on important matters… for example water rates, moving tax dates up.” The council narrowly approved water rate increases in early October.
An 11 percent tax increase on the table
Ms. Wdowiasz sent her proposed 2027 budget to the Common Council in mid-October, past the city charter’s deadline. It calls for a property tax levy of $11,095,609, up from $9,969,326 in 2026, an increase of 11.27 percent, the OBSERVER reported. The council has until Dec. 15 to adopt a budget.
“I send this budget with a fair amount of trepidation. I do not expect you to ‘like’ or ‘cheer’ for this budget,” the mayor wrote in a statement accompanying the proposal. “Whilst state mandates and costs continue to go up, an ever-shrinking tax base is asked to absorb more for the basic services for which our community relies on and needs.”
She also pointed to “longstanding financial challenges that have accumulated over decades, including debt obligations, aging infrastructure, legacy costs, and deferred financial decisions from prior administrations.”
At an Oct. 19 Finance Committee meeting, Councilman-at-large Nick Weiser, the committee’s chairman, asked how much room the city had left before reaching the state constitutional limit on how much it can raise in property taxes. “Very little,” Ms. Luczkowiak replied, according to the OBSERVER.
“I know council will review it. I know the Office of the State Comptroller will review it. Obviously there will be possible changes and revisions,” Ms. Luczkowiak said. She acknowledged under questioning from a resident that the proposal does not include anything “extra” to pay down the city’s accumulated deficit.
Councilwoman Natalie Luczkowiak questioned how the budget could carry such an increase when the council has not been asked to override the state property tax cap for 2027. “I don’t want anyone to think our problems are as easy as raising taxes,” she said. “We need to look at the budget.”
Mr. Weiser said he favored sending tax bills out earlier while keeping the current due dates, encouraging residents to pay early. He said he hoped that “giving the people the option of paying earlier could alleviate the cash flow concerns.”
A small village in moderate stress
The region’s other designation is far smaller in dollars. The Village of Alexander, which runs on a fiscal year ending in March and was scored in the comptroller’s spring round, was placed in “moderate fiscal stress” with a score of 58.3.
The worksheet shows the village ended its 2025 fiscal year with a negative assigned and unassigned general fund balance of about $100,000 against general fund spending of about $494,000. It ran an operating deficit of about $354,000 on combined spending of roughly $972,000, and its debt service rose to about 47 percent of revenues in 2025, from about 21 percent the year before.
The 21 the state could not score
The longest list in the region is not of stressed governments but of missing ones. The comptroller’s list of non-filers includes 21 Western New York municipalities:
- Erie County: the towns of Brant and Elma and the Village of Williamsville.
- Niagara County: the City of North Tonawanda and the Town of Royalton.
- Chautauqua County: the City of Jamestown and the villages of Bemus Point and Fredonia.
- Cattaraugus County: the City of Salamanca and the towns of Carrollton, Mansfield and South Valley.
- Allegany County: the towns of Andover, Hume and Willing and the villages of Almond and Richburg.
- Orleans County: the Town of Gaines and the Village of Holley.
- Wyoming County: the Town of Bennington and the Village of Silver Springs.
A municipality needs three consecutive years of financial data, with the latest year filed before the system’s deadline, to receive a score. State law requires annual financial reports within 120 days after the end of a local fiscal year.
Some of the region’s gaps are long-running. The report’s table of chronic non-filers shows the City of Salamanca, the Village of Bemus Point and the Town of Carrollton have gone 10 years without a score, and the Town of Hume and Village of Richburg seven. The Town of Bennington was designated in fiscal stress for 2024 but did not file in time to be scored for 2025, the report said.
The comptroller’s office treats non-filing as a warning sign in itself. Audits have found that governments that persistently miss the deadline “frequently have problems with records management, billing, financial management and/or internal controls,” the report said. It added that “local governments that file after several years in non-filer status often receive a fiscal stress designation which might have been mitigated with more timely intervention,” which is what happened in Dunkirk.
The listing does not by itself mean any of the 21 is in financial trouble, and some may have filed since the comptroller’s cutoff. The comptroller’s office maintains an online filing status tool where residents can check whether their local government’s report is in.
Everyone else
Elsewhere, the scores were low. All eight counties received no designation; Erie and Chautauqua counties each scored 9.6, Cattaraugus 10 and Niagara zero. Among the region’s cities that were scored, Niagara Falls scored zero, Batavia zero, Lockport 3.3, Lackawanna 3.3, Tonawanda 5 and Olean 19.2.
The City of Buffalo, which runs on a fiscal year ending June 30, scored 37.9, below the 45-point threshold for a designation but the highest of any undesignated municipality in the region. Buffalo also received a “moderate environmental stress” rating, with an environmental score of 43.3 driven in part by its reliance on state and federal aid.
The next-highest undesignated scores in the region belonged to the Town of Lyndon in Cattaraugus County at 35, and the Village of South Dayton in Cattaraugus County and Town of Centerville in Allegany County at 34.6 each.
The Albany factor
The report draws a line between rising city stress and recent state budgets. In the 2024-25 and 2025-26 state budgets, only Albany and Auburn received Miscellaneous Financial Assistance, a category of unrestricted aid. In the 2026-27 enacted budget, those appropriations jumped to more than $187 million for seven cities, including Buffalo, Rochester and Syracuse, “mostly intended to help close budget gaps,” the report said.
It also warned that recent increases in municipal aid have been either targeted allocations to specific cities or Temporary Municipal Aid, “which is not guaranteed for future years.” And it cited an August comptroller’s report showing that 49.2 percent of the state’s cities planned to override the property tax cap in fiscal year 2025 and 45 percent in 2026, far higher than towns, villages or counties.
That combination, targeted help from Albany and a growing reliance on tax cap overrides, is the backdrop for this year’s local budget season. In Dunkirk, Ms. Luczkowiak has told the council the comptroller’s office will review the city’s 2027 plan, and Mr. Weiser said he hopes the council has “a clear idea of what we want to do on the budget by mid-November.”
“Local officials should remain vigilant and be pragmatic when planning future budgets,” the report concluded. It also said the comptroller’s office “cannot accurately gauge the financial condition” of municipalities that do not file “without accurate and timely financial data.”
The Buffalo Chronicle has sought comment from Mr. DiNapoli’s Buffalo regional office, Dunkirk city officials and the cities of Jamestown, North Tonawanda and Salamanca.
Leave a Reply