Long Beach warns of tax hikes, service cuts if spending not curtailed

The Long Beach City Council painted a bleak picture of the municipality's finances at a budget hearing Tuesday night, describing $6 million deficits, virtually no "rainy day funds" left, and even further reductions in bond ratings this summer.

In somber tones, the council warned that if labor costs couldn’t be renegotiated and reduced in the upcoming year "taxpayers will be looking at a significant tax increase and/or severe service cuts."

City officials blamed the deep financial problems on several factors, primarily that in the past revenues were over-estimated, spending was not based on money in the bank, and a lack of spending controls.

City Council President John Bendo presented a stark picture: he said about 81 percent of the city's spending goes toward personnel costs, for police, firefighters and other city workers; another 13 percent is to pay down mounting debt. He said that leaves a mere 6 cents on every taxpayer dollar to keep the city running.

"The city can't run on 6 cents out of every taxpayer dollar," Bendo said. "The problems in the past have been hidden by some poor budgets." He said spending was not based "on what was in the bank," there were few if any spending controls and the city kept borrowing to cover costs.

"We were dipping into the rainy day fund," Bendo said. "That is gone."

Bendo outlined the city's salary picture. He said the average salary for city employees, without benefits, was $71,784. With benefits, he said, the average is $119,645. Bendo said most of the city's employees are members of the CSEA.

The city has laid off more than 164 employees. A total of 143 were part-time, non-essential, and 21 were full time.

He said the highest-paid city employee - who he did not name, earned $166,305, without benefits.

Bendo said the average city firefighter earned $135,257. The average police salary, he said, was $164,780, without benefits.

The council president said unionized city employees receive generous comp and sick time including medical and dental plans, and pensions. Summer hours are reduced between July 1 and Sept. 15.

The city, he said, has borrowed $4.2 million from a bank to continue operations to the end of this fiscal year.

Long Beach City Manager Donna Garden last month released Long Beach's proposed 2020-21 budget, which calls for a 2.87 decrease in the general fund, to $83.2 million. That translates to a 1.81 percent tax increase — the smallest in years. The tax increase will mean a $142.94 cent property tax increase to city homeowners per year. There will be no increase in water or sewer rates.

Bendo said "taxing you to death is not the answer." The city's tax rate was 8 percent in each of the last two years, "and it didn't help the situation," he said.

Gayden said Long Beach ended fiscal 2019 with a general fund deficit of $6.6 million, the result of overestimates in revenues. "By this time next year, it is going to be worse," she said in a statement.

On Tuesday night, Gayden said the city is developing a five-year plan to straighten out its financial condition. She also said the city is looking for new streams of revenue. That, she said, may include the sale of a city building and the installation of parking meters. She said the city has called on state and federal legislators to help it seek out public or private grants.

Gayden said the city's general fund, or rainy day fund is now down to about $285,000, from nearly $9 million only a few years ago.

She noted that Moody's Investor Service, one of the country's two major bond rating agencies, has downgraded Long Beach's bond rating, and a further downgrading is anticipated, perhaps by this summer. Lower bond ratings making borrowing for a municipality more expensive.

Gayden asked residents to send questions or comments to info@longbeachny.gov and they will be answered by May 18.

On another issue, Bendo said city staff members are looking at how best to open the boardwalk, which was shut down a few weeks after police found residents failing to practice social distancing. Ultimately, city officials said, whether the beach will be open this summer will be decided upon by Gov. Andrew Cuomo.