Less than a week after a letter from the state comptroller’s office, state Gov. Kathy Hochul offered Dunkirk at $13.7 million loan.

A sharp-toned letter from the Comptroller Thomas DiNapoli’s office received by the city of Dunkirk last month is what led to New York state delivering a $13.7 million loan for the cash-strapped municipality.

On May 30, the state office noted in the communication the city had a $12.7 million Revenue Anticipation Note maturing with interest due that was to be payable in July. Melissa A. Myers, chief of municipal audits in the Buffalo office, noted the current fiscal status of the city — and the 2025 budget — did not have “sufficient appropriations to provide funding for both operations and repayment.”

One week later, Gov. Kathy Hochul stepped in. She and state Democrats killed the possibility of a control board to oversee and manage finances for the municipality’s future. Instead, she floated the loan proposal that has a 7.5% annual interest rate.

According to Dunkirk Mayor Kate Wdowiasz, that loan is intended to pay off the funds owed by the Revenue Anticipation Note in July. City officials had hoped to go a different direction, but would not have the comptroller’s blessing.

“We were told that city officials intended to issue the Deficit Bonds authorized by the (City of Dunkirk Fiscal Recovery) Act to repay the (Revenue Anticipation Note) principal and interest,” Myers letter said. “However, as noted in our Budget Review letter issued November 2024, the ability of the city to issue Deficit Bonds is dependent upon actions that may not occur by July 2025 due to the state of the city’s records. While the Act authorizes the city to issue Deficit Bonds not to exceed $18.5 million to liquidate the city’s actual accumulated (deficits), it does not permit the city to issue Deficit Bonds unless and until the State Comptroller has reviewed and confirmed the existence of the Deficits and has certified the amount of the deficits.

“Unfortunately, to date the city has been unable to provide the documentation needed by our Office to certify the Deficits and adequately monitor the City’s financial condition.”

A copy of the letter was obtained by the OBSERVER after Wdowiasz’s remarks last weekend noting the delay in executing deficit bonds “lies squarely with the New York state Comptroller’s Office, which has failed to certify our debt despite repeated submissions and requests for action.”

On Thursday evening, the state Senate approved the loan the city so desperately needs. It still does not sit well with Sen. George Borrello, who proposed a control board to put the fiscally troubled municipality on a sustained path for the future.

“Albany Democrats forced through a bill that does nothing but plunge the city of Dunkirk deeper into debt, without any reform, oversight, or accountability,” said Borrello, R-Sunset Bay, Thursday evening after the vote. “Not one Republican supported it, and for good reason: it’s not a solution, it’s a state-sanctioned debt trap.

“This bill, introduced by Brooklyn Sen. Andrew Gounardes at the request of Gov. Hochul — despite Gounardes being over 400 miles away from Dunkirk — authorizes a 7.5% interest loan that will cost taxpayers nearly $10 million in interest over 15 years. That’s on top of the city forfeiting its $1.5 million annual (Aid and Incentives to Municipalities) payment, which currently funds essential services, just to make the loan payments.”

Borrello said three council members — Abigail Zatorski, James Stoyle and Nancy Nichols — communicated to Albany their opposition for the loan this week. However, none of these council members have publicly offered solutions regarding the July loan payment or for the city fiscal mess over the last 15 months with the exception of their approval of an 84% property tax increase in the 2025 city budget.

“This vote was a betrayal of public trust and financial common sense,” Borrello said. “The people of Dunkirk deserve real solutions, not a payday loan dressed up as policy. I will continue fighting for what this community truly needs: accountability, oversight, and a path to long-term stability.”

In response, Wdowiasz on Friday called Borrello’s comments “misleading,” and referred to the funds as a “responsible and strategic tool that allows the city of Dunkirk to restructure existing debt and avoid a financial collapse triggered by years of mismanagement under the prior administration,” she said. “This refinancing will prevent a default on the currently outstanding debt obligation and devastating cuts to public services, protect the jobs of our city workers, and allow us to continue delivering essential services to our residents.”