The City of Dunkirk is at a crossroads of a year, staring down fiscal shortfalls with state assistance. The path towards financial stability for Chautauqua County’s second-largest city is filled with deadlines, paperwork, audits and an investigation into the Dunkirk Treasurer’s Office.
Since the closure of an NRG power plant in 2016, and the eventual loss of tax revenue from it in 2023, the City of Dunkirk has struggled to steady its expenses and revenue. In 2024 things got worse when S&P totally removed Dunkirk’s bond rating, meaning the city couldn’t secure municipal financing on its own. That came to a head just months ago, when the city was staring down a deficit of more than $20.5 million. Now with a $13.7 million loan from New York State to cover some of that debt, State Senator George Borrello is questioning the status of last year’s independent audit.
“The city is now in the process of preparing its 2026 budget. I don't know how you prepare a budget without knowing the numbers and where they stand through a third party, independent audit," said Borrello, a Republican. "I've heard from members of the city council that they are not comfortable voting on a budget without knowing what the real financial status of the city is.”
Borrello said the mayor of Dunkirk, Kate Wdowiasz, told him the 2024 independent audit of the city would be in by July. To satisfy the state though, the state comptroller’s office tells BTPM NPR the audit just needs to be submitted in a “sufficient time for the comptroller to certify the deficit and for the city to issue bonds before Dec. 31, 2025.”
Wdowiasz, who’s been in office less than two years, said they’ve been working diligently to submit backlogged audits, which already includes 2021 through 2023.
“There were two quarterly reportings that were untimely, but they were not through any fault of the city," she said. "We had submitted our one quarterly report, and that was after we went into the Fiscal Recovery Act, and [the state] wanted changes to the way the report looked, which we provided them. And then the second one just happened to be like two or three days late because our fiscal affairs officer had gone on vacation, because she's entitled to take vacations.”
At 7.5%, Borrello called the interest rate on the state loan “high” and compared it to “loan sharking.” Another requirement of the bailout is that Dunkirk gives up millions in annual Aid to Municipalities funding, which Borrello blames on Governor Kathy Hochul.
“This is Aid to Municipalities funding that the City of Dunkirk desperately needs to guarantee this loan that [Hochul's] giving," said Borrello. "So she's she's making a huge interest rate off the taxpayers of the city of Dunkirk. She's guaranteed to have that annual payment covered by withholding revenue that the city needs.”
Wdowiasz, a Democrat, is defending the $13.7 million loan, believing it’s what’s needed for Dunkirk to begin its financial recovery and avoid becoming the first city in New York to go bankrupt. She was not a proponent of a financial control board for the city, as floated by Borrello and other nearby legislators.
“So this basically gets us to an even playing field. And yes, I know that like a $13 million loan sounds scary, and the state is going to take some of our...most of our state aid that they would normally give us, that's fine," said Wdowiasz. "Looking at a $1.2 million payment every year is better than filing for bankruptcy.”
Dunkirk residents are also dealing with an 84% property tax increase, spurred by the city’s fiscal situation. State Comptroller Tom DiNapoli is also in the midst of an investigation into Dunkirk’s Treasurer’s Office, which was temporarily shut down by the state earlier in the year.
The mayor said her goal is to get their debt certified by the end of the year, and then take out deficit bonds to setup a 15-year recovery path.
