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Long Beach must spend $3 Million on payouts

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Long Beach’s financial struggles came into sharp focus at a virtual City Council meeting Tuesday night, when the city comptroller said that the municipality would likely spend $3 million next year and every year “for the foreseeable future” on payments to employees leaving their jobs.

The city has no rainy-day fund, and so has had to resort to borrowing to make the separation payments. Whether it will have to borrow the money again next year or in the years afterward will depend on how its finances shape up.

Comptroller Inna Reznik offered her forecast for future spending after the council unanimously approved $2.7 million in borrowing to make separation payments to about 40 people.

As recently as May, the city issued a bond for $4.7 million for another batch of separation payments. Wall Street bond-rating agencies have lowered the city’s ratings several notches as a result of its messy finances, a situation that has worsened in recent years.

The latest bond authorization touched off a lively discussion among council members, who defended the borrowing as an unfortunate necessity, and Roy Lester, a former president of the Long Beach Board of Education and a frequent critic of some of the city’s policies.

Lester, a bankruptcy attorney in Long Beach, asked what the city’s projections were for the next fiscal year. Reznik, who joined the administration 14 months ago, said Long Beach would likely spend around $3 million for separation payments.

“That seems to have been the trend for the last few years,” Reznik said. “That has been, on average, about $3 million.” She added that such spending would continue, and that if the city borrowed again in the future, it would again seek five-year notes.

Several council members reluctantly defended the practice. “We didn’t start this process,” Councilman Mike Delury said. “This started in budgets before this council took office.” The financial team assembled by City Manager Donna Gayden, Delury said, has put together a five-year plan for Long Beach’s finances.

“There’s no quick fix to this,” he said. “I do not like debt. But with this management team, we will get through this. I just don’t know when. Once it’s done and satisfied, I will be happy to hand over the reins.”

Lester responded that each city administration blamed previous ones for Long Beach’s financial struggles. “They always say it’s the other guys,” he said.

Council Vice President Karen McInnis said that investigations several years ago resulted in a “payout scandal,” and that the city was trying to avoid similar problems in the future.

The payouts resulted in one of the most embarrassing chapters in the city’s recent history, with investigations by state and federal law enforcement agencies as well as the Nassau County district attorney’s office. In early 2019, Long Beach filed suit against former City Managers Jack Schnirman and Rob Agostisi, seeking to reclaim $2.4 million in what the city claimed were illegal payouts. Schnirman is now the Nassau County comptroller. His office has denied any wrongdoing on his part.

City Council President John Bendo said that the continuing borrowing “is why the city is working with a long-range plan — so we don’t have to keep borrowing.”