A letter to the city on Friday says city officials are unaware of the municipality’s “cash flow or deteriorating financial condition.”

A report from the state Comptroller’s Office, made public Friday, is highly critical of the city of Dunkirk’s 2026 budget proposal.

“Although (the Comptroller’s Office) told the mayor (Kate Wdowiasz), treasurer (Mark Woods), fiscal affairs officer (Ellen Luczkowiak), and members of the council on multiple occasions including during the 2025 budget review that the financial records were incomplete and inaccurate, they have not taken sufficient action to address these deficiencies and continued to make key decisions including developing this budget without inaccurate information.” That’s just one of many negative statements about Dunkirk’s budget and financial processes in the 13-page letter signed by Deputy Comptroller Robin Lois.

The Comptroller’s Office gets to review city budget proposals as part of the terms of the 2024 Fiscal Recovery Act, passed by the state Legislature allowing Dunkirk to access $18.5 million in debt liquidation funds.

The office hasn’t liked what it saw this year. “City officials do not have accurate, complete and up-to-date accounting records,” the letter states. “As a result, city officials do not know the city’s current financial position and cannot properly monitor the city’s cash flow or deteriorating financial condition.”

In fact, Dunkirk’s records are so poor that the Comptroller’s Office states it “significantly limited our review.” However, it was able to determine that “significant revenue and expenditure projections in the proposed budget we were able to assess are generally not reasonable.”

The comptroller’s staff also determined that if no action is taken, Dunkirk could run out of cash flow in March.

State Sen. George Borrello said he will be renewing his calls for a financial control board for the city of Dunkirk. “This report makes one thing unmistakably clear: my call for a financial control board was not only warranted, it was necessary,” said Borrello, R-Sunset Bay. “In light of these findings, I will be renewing my push for a control board in the 2026 legislative session to ensure the responsible oversight and fiscal discipline that Dunkirk taxpayers deserve.”

The letter bashes Dunkirk for failing to submit a budget calendar. The Comptroller’s Office requested a list of meeting, hearing and budget adoption dates, but did not get one. “Rather, the councilman-at-large (Nick Weiser) verbally advised us on Nov. 3 that the council planned to adopt the budget on Dec. 2.”

Weiser also announced at this week’s council meeting that the required public budget hearing will be Monday at 5:30 in City Hall’s chambers.

Here’s some of the other things that Dunkirk is criticized on in the letter:

— The city has depleted its fund balance too much. “While fund balance can be appropriated in the budget, there must be sufficient fund balance available to do so, and consistently appropriating fund balance — instead of planning to use recurring revenue sources long — can deplete fund balance to level levels that are insufficient to cover unexpected contingencies in routine cash flow, as is the city’s current situation.”

— The city is improperly moving revenue between funds to pay for administrative costs. The Comptroller’s Office questions “the continued practice of budgeting for underfund activity that will not materialize, especially because the general fund has and will most likely continue to fully fund these administrative costs.”

— The proposed budgets for the police and fire departments are underfunded.

— Health insurance appropriations were overestimated by $160,875, but retiree health insurance was underestimated by $102,360.

Wdowiasz’s 2026 budget proposal, without any changes from council, was $29.5 million with nearly $10 million of those costs coming from property taxes.

“We take the Comptroller’s concerns seriously,” she said. “While system upgrades created challenges in record keeping, these changes are necessary to modernize our financial operations. With the abolishment of the elected Treasurer position and the transition to a professional Fiscal Affairs Officer, we expect stronger accountability and more accurate reporting going forward,” Wdowiasz said.

She also noted Dunkirk’s fiscal crisis has been building for more than a decade and will take time to fully recover from. “This is not a short-term issue,” Wdowiasz said. “Our financial challenges have accumulated over many years, and while we work to right size City operations, we must also address community concerns and continue to meet our contractual obligations.”

While acknowledging Borrello’s call for a financial control board, Wdowiasz stressed such a measure would impose undue costs on taxpayers and residents of Dunkirk.

“We understand the senator’s concerns, but the cost of a control board does not outweigh the benefit to our community,” she said. “Instead, we have asked the senator to consider establishing a regional control board, as several areas of Chautauqua County are currently struggling with rising taxes and water rates. A regional approach would provide broader oversight and shared solutions without placing the entire burden on Dunkirk alone.”