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Deficit denials skew reality

Scoffing at the idea of a deficit is a dangerous mindset — and it sends an inaccurate fiscal picture to a community whose support is relied upon. Within the last month, the OBSERVER covered shortfalls in two accounts: the Dunkirk Local Development Corp.’s 2017 festivals line and the Dunkirk City Schools budget for the current year.

To set the record straight, because both entities were spending more than its revenues that does not mean they were without cash. They had surpluses they could rely on for cash flow.

During a January meeting, Dunkirk schools business manager Cindy Mackowiak noted the district was having trouble making ends meet. Fortunately, it had a reserve fund of more than $3 million to dip into.

“When we spoke of the $200,000, it wasn’t a deficit, it was the reduction of the monies that were used out of the $3 million reserve payment that we used to offset and balance the budget,” city school board President Dave Damico stated Feb. 14. “By no means are we in a $200,000 deficit. We are actually in a self-imposed spending freeze, to try to hold as much of that money to rollover to next year.”

Dunkirk schools reserves, built in previous years to prepare for NRG Energy Inc.’s decreasing payment in lieu of taxes, remain healthy. But the state comptroller did admonish the district for having such a hefty line.

City festivals also are running a surplus, but it did not fare well in 2017, according to the audit of the DLDC. With revenues of $243,808, expenses were $5,163 more. Those previous surpluses made up for that deficit, not taxpayer dollars.

Where caution is needed, however, is with those rainy-day or reserve funds. Continued overspending will dry up that well. We’ve seen it recently with Brooks Hospital, which once had $17 million set aside.

If it happens with the schools and city, someone will be on the hook. That person is always the taxpayer.

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