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Long Beach City Council overrides state tax levy cap

President says proposed 8 percent increase could change

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Acting City Manager Rob Agostisi gave a budget presentation at Tuesday’s City Council meeting.
Acting City Manager Rob Agostisi gave a budget presentation at Tuesday’s City Council meeting.

The Long Beach City Council voted unanimously at Tuesday’s meeting following a budget hearing to override the state tax cap as members consider a proposed 8 percent tax increase and $98 million budget for the upcoming fiscal year. The vote was held after Acting City Manager Rob Agostisi, who was appointed in January, gave a budget presentation, saying that while the tax hike was a “big ask” of taxpayers, it was essential to fill a $2.8 million deficit, turn the city’s finances around in the wake of a fiscal crisis last year, restore credibility with Moody’s Investors Service and lay the foundation for a long-term financial recovery plan. The city released a proposed $98 million spending plan last month for the upcoming fiscal year, which begins July 1. If approved, the budget would raise taxes on the average home by $304.63 per year, in addition to separate sewer and water rate increases. Agostisi said that city taxes account for 35 percent of homeowners’ tax bills, while school and county taxes make up the rest. The state tax cap limits property tax levy increases to roughly 2 percent or the rate of inflation, whichever is lower. However, former Comptroller Kristie Hansen Hightower, who works as a consultant for the city, said that the city’s actual cap was 3.5 percent this year. This would mark the second year that residents are being hit with a tax increase. Last year, the council approved a $95 million budget, with an 8.3 percent tax increase for the current fiscal year that avoided layoffs and drastic cuts to services. At Tuesday’s meeting, a number of residents criticized the administration for the way it has handled the city’s finances, particularly under former City Manager Jack Schnirman, who was appointed in 2012 and served until he took office as county comptroller in January 2018. Many said that the proposed increase was unaffordable. Long Beach resident Brian Kellar, a retiree, said he was a “tax casualty.” “We raised three lovely children in Long Beach, they’re all in their 30s, and not one of them can afford to live in Long Beach. That is a tragedy and a travesty,” he said. “I’m a little bit upset — and more with your predecessors than anyone else.” Resident Eileen Damore said that since she have moved to Long Beach in 2016, her taxes and water bills increased significantly. “Everything is increasing,” she said. “I can’t afford to live here anymore. I’m really shocked by what I see right here.” City Council President Anthony Eramo emphasized that the council could amend the budget before it votes on the spending plan at the end of the month, and could choose to lower — or increase — the tax levy. Eramo said last month that he would like to see the proposed tax hike significantly reduced. In his presentation, Agostisi said he was not sugarcoating the city’s financial condition — he noted that Long Beach remained in “significant fiscal stress” — the highest level under State Comptroller Tom DiNapoli’s Fiscal Stress Monitoring System — for the second year in a row, as well as a recent downgrade to the city’s credit rating by Moody’s to just two notches above junk bond status. He also noted an ongoing audit of the city’s finances by DiNapoli’s office — which is reviewing the proposed budget — as well as a comprehensive review by the state’s Financial Restructuring Board for Local Governments. DiNapoli’s office and Nassau County District Attorney Madeline Singas are also looking into the city’s practice of borrowing for separation payouts to current and former employees that sparked an outcry among residents last year. The proposed budget includes $1.7 million in borrowing for planned retirements. Agostisi noted a history of “structurally imbalanced” budgets. The presentation included an introduction of the financial consulting firm that the city retained last month, Great Neck-based Capital Markets Advisors LLC, and representatives discussed plans to help improve the city’s finances and operations. “The city has been locked in a cycle where every few years, some massive adjustment needs to be made to address a structural imbalance,” Agostisi said. “Historically, what we’re seeing is very large tax increases because the number catches up to us." Agostisi emphasized the need expand the city’s tax base, and said that he is looking at maximizing existing revenue streams and a number of ways to increase revenue, particularly through “smart-growth” initiatives and development. Revenues in the proposed spending plan declined by $1.6 million and health care costs are increasing $586,500. Agostisi said that the budget “right-sizes” city revenues and expenses to reflect actual trends, including a $140,000 increase in overtime. “We are trying to put forth an honest budget,” he said. “Overtime … we haven’t accounted properly for this expense every year. We’re … implementing managerial oversight and control to ensure that people who work overtime simply aren’t doing so to augment their existing salaries. We want people working overtime when the actual need for overtime exists.” The proposed budget maintains city services. But it does include $1 million in salary increases, primarily due to contractual raises. While personnel costs make up just over 70 percent of the proposed budget, Agostisi said that that budget does not include layoffs and that the city is awaiting recommendations from the state’s financial restructuring board, which is expected to release its review in the coming months. “The city remains engaged in what amounts to a protracted course correction,” Agostisi said. “That course correction extends to before [Hurricane Sandy]. For those of you who may recall, at the end of 2011, the city was borrowing to make payroll. That is not the sign of a healthy organization.” Agostisi said that tax increases were either minimal or avoided all together in the years after the storm in order to ease the burden on residents struggling to rebuild. “The city, in the years after Sandy, made a very deliberate policy determination, and that determination wasn’t spotless,” he said. “In the years after Sandy the city suppressed tax hikes to every extent possible … in order to allow people to rebuild. It’s very difficult to impose tax increases on people who aren’t even occupying their homes. Therefore, state and federal relief funding revenue was used for a number of years to plug the hole by the revenue loss.” But a number of residents said the Democratic administration, which took over City Hall in 2012, had years to address the city’s financial problems. “You let Jack Schnirman borrow and borrow and borrow, and nobody said a word about stopping him,” resident Eileen Hession said. “Do something about all these raises, do something about your six-figure hires since we’ve been in this position. Your hands are not tied.” Former school board President Roy Lester said that DiNapoli’s office had pointed out the city’s structural imbalances going back to 2013. “What’s changed?” Lester said. “We’re under more fiscal stress, we owe more money … and we’re borrowing again to balance our budget.”