Purpose of Budget Review

The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the City’s preliminary budget for the 2016 fiscal year are reasonable.

Background

The City of Glen Cove is located in Nassau County. Our Office completed a review of the City’s preliminary budget for the 2016 fiscal year. The objective of the review was to provide an independent evaluation of the proposed budget.

Key Findings

• City officials are projecting operating surpluses for the 2015 fiscal year totaling $469,078 in the general fund and $150,449 in the water fund and an operating deficit totaling $172,691 in the golf and recreation fund.
• The City projects that, as of December 31, 2015, it will have unassigned fund balance deficits totaling approximately $4 million in the general fund, $516,476 in the water fund and $740,254 in the golf and recreation fund.
• The 2016 proposed budget contains significant financial risks that the City Council should consider when adopting the 2016 budget. The City continues to finance operating expenditures with debt when it should be funding such expenditures with operating revenues. In addition, the practice of supporting a significant amount of operating expenditures with one-shot revenues that may not materialize in 2016 is imprudent.
• The City included $3.5 million in revenue in the 2016 proposed budget from the sale of waterfront property and City officials were unable to provide any definitive documentation that the sale will take place during the upcoming year.
• The 2016 proposed budget contains an insufficient appropriation of $315,000 for the payment of tax certiorari refunds, which have averaged $848,000 over the last three years. City officials told us they intend to use debt to finance the balance of 2016 tax certiorari settlements above the existing appropriation.
• The City’s proposed budget complies with the tax levy limit because it includes a tax levy of $29,352,553 that maintains the 2016 tax levy within the limits established by Law.

Key Recommendations

• If the City realizes the $4.6 million in revenues associated with the property sale and waterfront development project, it should avoid using nonrecurring revenues, such as proceeds from the sale of real property, to fund recurring operating expenditures. The City Council should review this revenue and determine whether it is likely to be realized during 2016.
• City officials should treat tax certiorari costs as routine expenditures and pay them from annual appropriations.
• City officials should continue to monitor the financial position of the water fund and implement a financial plan that provides for the gradual elimination of the fund deficit.
• City officials should continue to monitor the financial position of the golf and recreation fund to ensure the fund generates a fair return on operations. City officials should implement a financial plan that provides for the gradual elimination of the fund deficit.