State Sen. George Borrello, R-Sunset Bay, speaks on the Senate floor last week.

A control board provides an ability for Dunkirk’s city government to continue to operate as it works to reorganize – but the experience may not be pleasant.

Legislation introduced by state Sen. George Borrello, R-Sunset Bay, earlier this week will make some stringent requirements of the city’s staff and Common Council when it comes to budgets and spending cuts, and it could eventually be painful for city employees, too.

In the best case, the City of Dunkirk Interim Finance Authority would work with the city government to make sure the city’s bills are paid while backstopping the city’s restructuring efforts. There is a lengthy process spelled out in Borrello’s legislation governing that process, and city officials would spend a lot of time preparing required reports and plans in order to prevent a control period.

HOW A CONTROL PERIOD BEGINS

If things don’t go well, the authority will be able to initiate a control period any time certain conditions are met, including if the city fails to pay the principal or interest on any of its bonds or notes when due, the city incurs a major operating funds deficit equal to or greater than 1% of the total results of operations for those funds in a fiscal year, if the city violates the terms of its agreement with the City of Dunkirk Interim Finance Authority in a way that significantly impairs the marketability of its bonds or notes; if the city’s chief fiscal officer certifies – either at the authority’s request or on the officer’s own initiative – that based on current facts, they cannot make certain required certifications of the city’s financial well being.

A control period would end once the authority determines that none of the conditions justifying the imposition of a control period exist. After the termination of a control period, the authority shall annually review paragraphs (a) through (e) above and determine whether any such events have reoccurred. Each determination must be published. Any certification by the Chief Fiscal Officer must be based on a written determination, which shall consider the opinion and report of an independent expert in municipal securities marketing, selected by the authority. The expert’s opinion and any other information considered shall be made public upon delivery to the authority.

Notwithstanding the foregoing, no control period shall extend beyond either January 1, 2055, or the date when all bonds issued by the authority have been refunded, discharged, or otherwise paid.

WHAT COULD HAPPEN DURING A CONTROL PERIOD

The authority would have the ability to, on its own during a control period, formulate and adopt its own changes to the financial plan without approval by city officials, though the authority can consult with the city and any covered organizations. A control period would also allow the authority to review the city’s operation, management, efficiency na productivity and issue a report on its findings, audit compliance with the financial plan and recommend to the city and covered organizations changes to their operations, management, efficiency or productivity in order to reduce costs and improve services. Some of that work could be done by the state Comptroller’s Office.

A control period also gives the authority more access to books, records and contracts as well as greater authority to oversee city contracts with outside companies or agencies. The authority must review and approve all proposed long

term and short-term borrowings by the city or any covered organization during a control period. No such borrowing may occur without authority approval. However, the city and covered organizations may still issue

bonds or notes to refinance existing debt.

The authority would also have the authority to issue binding orders to city and covered organization officials as needed to implement the approved financial plan.

During any control period, the authority shall withhold transitional state aid and not release those funds to the city. During a control period, if the authority determines that a wage freeze is necessary to adopt or maintain a city budget or financial plan the authority may declare a fiscal crisis after enacting a resolution. Once declared, the authority can order the suspension of all salary or wage increases for city employees and employees of covered organizations that are set to take effect after the date of the order. This includes increases under collective bargaining agreements, contracts, or arbitration awards, as well as increased payments for holiday and vacation differentials, shift differentials, and salary adjustments according to plan and step increases included in employee contracts. The suspension applies to any increases that would take effect after the date of the order, but there are exceptions that include bargaining units or employees who agree to defer pay increases. The authority can also order a hiring freeze or suspend the hiring of new employees to keep the budget in balance.