The City Council voted unanimously May 15 to override the state tax cap amid a fiscal crisis that could lead to a 12.3 percent tax increase or service cuts and layoffs.
At the council’s second budget hearing, officials also voted to approve a measure initiated by State Sen. Todd Kaminsky requesting assistance from the state’s Financial Restructuring Board for Local Governments. If approved by the state, the agency would perform a comprehensive review the city’s finances that could net $5 million in grants and loans to assist in its financial recovery.
The review would be separate from an audit recently announced by State Comptroller Tom DiNapoli’s office, and would help the city institute budget reforms to help stabilize its finances and improve management practices.
Kaminsky called for the measure amid a budget shortfall after the council voted 3-2 to reject a $2.1 million bond measure to cover separation payments and “draw downs” of employees’ accrued time in the 2017-18 fiscal year, following questions over whether a number of employees, including former City Manager and Nassau County Comptroller Jack Schnirman, were entitled to the payments.
Acting City Manager Mike Tangney said that the rejection of the measure created a hole in the current spending plan through the end of the fiscal year on June 30 and that the city might be unable to make payroll because the borrowing had been included as revenue in the 2017-18 budget. Moody’s Investors Service, meanwhile, recently revised the city’s credit outlook from stable to negative, citing “years of operating deficits and the City Council’s failure to approve budgeted borrowing to pay for operating expenses.”
The proposed borrowing measure sparked harsh criticism from residents, however, who said that just before Schnirman left office in January, he touted a $9.4 million surplus and claimed that the city’s finances were sound.
The council is considering raising taxes as part of a proposed $95 million budget for 2018-19 to help fill a $4.5 million deficit. The council was scheduled to vote on the spending plan on May 30.
DiNapoli’s office said that revenue and expenditure projections in the proposed spending plan were “reasonable,” but reiterated that the city is in significant fiscal stress and that its financial condition had been deteriorating in recent years.
At a heated meeting last week, Tangney — who is also the city’s police commissioner — told residents that the proposed budget maintains services but would increase taxes on the average home by $400 per year.
He said that the city is still waiting for $7 million in pending reimbursements from the Federal Emergency Management Agency and the state for costs associated with Hurricane Sandy, and dealing with increased health care and pension costs, contractually obligated salary increases, debt service and legal judgments. Public safety and employee benefits represent more than 45 percent of the budget, Tangney said.
At the May 1 budget hearing, Tangney said that officials were able to come up with $1.2 million to fill the budget gap, in part through old bonds that had not been used for previous separation payouts.
The city has also cut overtime, curtailed spending and does not intend to fill Schnirman’s job and other vacant positions until after the end of the fiscal year.
In order to avoid such a large tax increase, Tangney did float a number of potential service reductions in the city’s police and fire departments, day care programs and city events. The childcare program at the city’s Magnolia Center, he said, costs taxpayers more than $80,000 per year but does not earn enough revenue to cover operating expenses.
Tangney also called for the city’s active union members to contribute to their health care costs, and said that the city would also begin requiring organizations to cover the city’s expenses associated with events such as Irish Day.
He also discussed ways to boost revenue, including the installation of parking meters in the central business district, as well as naming rights for sponsorships in the city, and “smart development” in order to increase the tax base as part of a proposed comprehensive plan.
But a number of residents criticized the proposed budget, which includes a number of non-contractual raises and fee increases. Residents have also questioned why some non-union employees were being moved into union positions — which led to accusations of political patronage. Officials said the jobs already existed and were being filled.
“This budget clearly is not trying to find efficiencies and puts the burden unnecessarily on the taxpayers,” said Long Beach High School student Eddie Vrona, who called on council members and management employees to take pay cuts. “… Large, politically motivated and unnecessary mailings to make the City Council look good need to be eliminated.”
Vrona also called for cuts to police overtime and Tangney’s police commissioner salary. According to See Through NY, Tangney, a 40-year member of the Police Department, earned $230,000 as police commissioner last year. He is not receiving additional compensation as the acting city manager.
“The police commissioner of New York City makes less than the police commissioner of Long Beach,” Vrona said. “The City Council has some nerve trying to layoff hardworking CSEA workers who live check to check.”
Resident John Ashmead noted the comptroller’s recent budget review, saying the report noted that officials continue to take actions that are “detrimental to the city’s financial condition.”
“We run structural deficits every year, the FEMA spigot has basically stopped and our debt has more than doubled in the past six years,” he said. “I think letting go low-paid sanitation workers, or cutting other low-paid workers, or not buying more planters, is avoiding the real issues.”