Purpose of Budget Review

The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the City’s proposed budget for the 2016-17 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 proposed budget includes estimated one-time revenue of $600,000 from the sale of City property and there is currently no contract for the sale of this real property.
• The proposed budget includes revenue estimates of $4.9 million for beach charges, $9.3 million for refuse and garbage charges, $4.4 million for metered water sales and $5.1 million for sewer rents. These estimates include amounts that are expected to be realized from increases to the beach charges, refuse and garbage charges, metered water sales and sewer rents, which the City Council has not yet authorized.
• Overtime salaries are budgeted at $2.3 million, despite costs averaging over $2.9 million for the last five completed fiscal years.
• City officials partially implemented recommendations included in our budget review letter issued in May 2015.
• The City’s proposed budget exceeds the allowable tax levy limit.

Key Recommendations

• Review the one-time revenue from the sale of City property and determine whether it is likely to be realized during 2016-17.
• Ensure that the potential increases for beach charges, refuse and garbage charges, water rates and sewer rents are authorized by the City Council prior to the adoption of the budget or modify the budget accordingly.
• Ensure that necessary internal controls are in place and operating effectively to control overtime costs.
• Adopt a local law overriding the tax levy limit before adopting the proposed budget or adjust the budget to be within the allowable tax levy limit.