The City of Long Beach is officially broke.
John McNally, the newly appointed executive assistant to City Manager Donna Garden, said the city has a $14.6 million deficit, the result of budgeting in previous years that relied on income that never materialized.
On Wednesday, 142 part-time city employees, considered non-essential, will be laid off. They include people who work in the city's recreation department, youth department and senior center.
"The city is on the brink of a fiscal emergency," said John McNally Tuesday morning.
The City of Long Beach has instituted an immediate hiring freeze.
In a statement, City Manager Donna Gayden, who has been in her post only since Feb. 27, said, "The city has been in denial about its finances. Long Beach has lost more than $77 million in revenue in the general fund since 2014, yet continually budgeted for significantly more. I was hired to work with the council to get the city on a path toward fiscal solvency."
City Council President John Bendo said, "We knew the city's finances were a mess, but it's even worse than we imagined. Prior administrations have been kicking the can down the road for years. We're now at the end of that road. There are difficult and painful decisions we're having to make. But we don't have a choice. The pandemic has made an awful situation worse."
Bendo said in an interview that further job reductions in the city are a possibility. Asked about the possibility of a tax increase, Bendo said "If I had a crystal ball. "I would say so." He declined to say how much of a tax increase would be needed. But, he said, "I don't know how we can avoid" a tax increase."
"We have to work with the unions," Bendo said. "We're talking about a cultural shift in the city. This is going to impact the residents." Fees at beaches might go up as well, Bendo said.
Bendo said previous city administrations did not carry through on promises to establish plans to rig Long Beach's finances. "This was supposed to have been done by previous managers," he said. "But it wasn't done. We didn't have the right people in the city administration." Now, he said, the new city manager is trained in municipal finance and plans to revitalize the city's finances will go forward
In a news release, the city said it had "grossly overestimated revenues and underestimated expenses in each of the last six years, resulting in annual deficits ranging from just below $800,000 to as much as $8.3 million. The city council and city manager are committed to turning the city's finances around and have pledged to develop and implement a five-year plan to achieve that end."
A formal budget is to be presented to the Long Beach City Council Thursday.
McNally said "serious discussions" were underway Tuesday with union officials representing other city employees, including police, fire and the Civil Service Employees Association.
The city has been in contact with New York State's Financial Control Board, seeking relief, McNally said.
The city has had financial difficulties for years now, and word that it has a steep deficit is not a surprise to many officials.
In previous years, McNally said, the city relied on income that did not materialize. "They budgeted for income that never happened," he said. Money did not come in from anticipated sources such as beach fees, water fees and other items.
In 2014, McNally said, the city had a $9 million surplus. But as the anticipated revenue did not come in, "that figure dwindled and dwindled and dwindled."
Ian Danby, chairman of the Long Beach Chamber of Commerce, said, "I hope we can turn this around. It's a time of pandemic. We've got to pull together."
Danby said the chamber will survey members to understand their problems fully and how they can be resolved.
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