NIAGARA FALLS, N.Y. (WIVB) - A stalemate between New York State and Seneca Nation could put the City of Niagara Falls under water.

The state and the Senecas are still fighting over casino revenue while the city is already planning next year's budget. The biggest factor is whether the state will reach an agreement with Seneca Nation to continue casino revenue payments.

"We prefer to use the word when, so we believe it's going to happen," said Andy Touma, Chairman of Niagara Falls City Council.

"Well it's already crunch time, I don't care what anybody thinks, we have to worry about the budget now," said Niagara Falls Councilman William Kennedy.

Seneca Nation stopped sharing casino revenue with the state more than a year ago after a section of the compact expired for sharing money.

The dispute is in arbitration.

"They're still searching for a third arbitrator, who knows how long that will take and so the arbitrator's are going to decide which side is right," said council member Chris Voccio.

Last year, Niagara Falls received more than $16 million in casino revenue and $11 million of that was used to build the 2018 budget.

Next year the city may not see anymore casino funds. Council members are struggling to figure out how to build a budget with millions of dollars they may never see.

Wednesday night city council members approved a casino spending policy that would only work if casino payments continued.

The policy would stash away 5 percent of casino revenue right off the top into a reserve fund. The remaining funds would be split into other areas such as paying the city's debt, capital infrastructure and business development. Whatever money is left over, seven percent of that total would also be put away.

As the arbitration process continues, officials worry about what will happen if a new agreement isn't reached.

"That means possible additional revenue sources and could possibly mean cuts through attrition, we're not sure, everything's on the table at this point," said Touma.