OBSERVER Photo Smokestacks at NRG tower over Dunkirk from the waterfront, but budgets plans — in city and its school — are not adjusting.

As Dunkirk Mayor Wilfred Rosas unveiled his 2019 budget proposal at a press conference in City Hall on Oct. 12, he made the same promise that has been made in previous years by other administrations: there will be no tax increase. On simple mathematics alone, it appears to be almost magical.

“The proposed budget is balanced with respect to revenues and expenditures and does not call for an increase to the property tax levy,” Rosas said on that afternoon.

Despite all the good news in recent years that surrounds the city — including the Athenex project, the building of the Battery Point Villas and a revitalized waterfront — there remains a dark cloud that is hard to ignore. Where will Dunkirk, in the coming years, make up nearly $4 million in revenue that was to come from the now-dormant NRG Energy Inc. plant?

City officials, who are currently questioning and going through the $23.6 million proposal, are not the only ones who are facing a dilemma. On Marauder Drive, there are just as many serious concerns about the $4 million gap from the power plant at the Dunkirk City School District, which runs on a $45.7 million budget for the 2018-19 school year.

For now, New York state is pitching in transition aid totalling close to $4 million for both entities to continue running their operations close to the status quo. That funding, however, will run out soon.

So here’s the problem for both tax-collecting entities. NRG first announced in 2012 it was going to mothball the plant. Why was there no plan by either entity for its possible closing?

Local officials — then and now — appear to act as though this NRG crisis is new. Far from it. There needed to have already been serious discussions about reining in spending six years ago.

Even today, it’s all talk and little action. Dunkirk schools most recently approved budget in May increased spending by $2.3 million — or 5.29 percent. The current city proposal ups spending $1.3 million — or 5.8 percent.

Those are drastic hikes in one year even when taking into account inflation.

Unsurprisingly, most of the expenses of the $68 million in both budgets goes to salaries and benefits. In the city, that makes up $13 million — or 55 percent of the budget. In the schools, it is 69 percent — or $31 million of the spending.

Employee costs, unless there are cuts, will not be decreasing. That’s just a fact of life in the public sector.

So what’s next to cover the gap of the NRG payment to the school and city? Chautauqua County and New York state could get tough and tell NRG they are no longer on a payment in lieu of taxes agreement and put the facility back on the tax rolls. That would take some legal intervention and who knows how long that could last.

Maybe NRG sells the plant to another power generator. That seems unlikely as well since the Huntley plant in Tonawanda may have had a buyer, but NRG would not budge.

Taking NRG out of the equation, there are other — more painful — alternatives. One includes the city and the schools upping the taxes since the city is nowhere near the state’s constitutional taxing limit. Once that threshold is reached, then bankruptcy and a potential control board would loom. That could rightsize and stabilize both entities — in terms of staff and salaries as contracts would become null and void.

No matter how the scenario plays out, government and the school district did not change how they did business during the NRG uncertainty. In fact, last March former Dunkirk schools business administrator Will Thiel painted a bleak picture for the future of the district’s finances.

“It’s not a surprise there will be a deficit, but you have to be mindful that when you’re there, it is difficult to come back from that,” he said. “We won’t be able to achieve the efficiencies necessary to bring us back from that, unless we, one, find ways to control expenses or, two, find additional revenue.”

Thiel left the district this past summer to take a position in a suburban Buffalo district. He obviously saw the writing on the wall.

John D’Agostino is the OBSERVER publisher. Send comments to jdagostino@observertoday.com or call 366-3000, ext. 401.