Purpose of Budget Review

The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the City’s tentative budget for the 2015-16 fiscal year are reasonable.

Background

The City of Long Beach, located in Nassau County, has been authorized to issue debt totaling $12,000,000 to liquidate the accumulated deficit in the City’s general, water, sewer and risk retention funds as of June 30, 2012. Local Finance Law requires all local governments that have been authorized to issue obligations to fund operating deficits to submit their proposed budgets for the next fiscal year to the State Comptroller for review while the deficit obligations are outstanding.

Key Findings

• The City’s proposed budget includes estimated one-time revenue of $1.3 million from the sale of City property. However, City officials could not provide documentation to show that this revenue will be realized in 2015-16.
• The proposed budget includes estimated revenue of $2.3 million in federal aid. However, the City has not yet submitted the application to the federal agencies.
• Overtime salaries are budgeted at $2.1 million, despite costs averaging over $2.9 million for the last five completed fiscal years.
• The proposed budget includes revenue estimates for metered water sales and sewer rents of $4.4 million each. These estimates include amounts that are expected to be realized from a 2 percent increase in metered water rates, which the City Council has not yet authorized.
• The City’s proposed budget complies with the property tax levy limit set by statute.
• We also determined that City officials generally implemented our recommendations included in our budget review letter issued in May 2014.

Key Recommendations

• Review the one-time revenue from the sale of City property and determine whether it is likely to be realized during 2015-16.
• Apply for applicable federal aid.
• Ensure that necessary internal controls are in place and operating effectively to control overtime costs.
• Ensure that the potential water rate increase is authorized by the City Council prior to the adoption of the budget.