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 Yonkers is authorized to issue debt totaling $45 million to liquidate the current deficits in the City School District’s general fund as of June 30, 2014. Chapter 55 of the Laws of 2014 requires the City to submit its proposed budgets for the next fiscal year to the State Comptroller and the Commissioner of Education for review while the deficit obligations are outstanding.

Key Findings

• The District’s budget request did not include an appropriation for textbooks. The District has three unsettled union contracts that expired in June 2014 but has not budgeted for additional expenditures it could face if these contracts are settled.
• The City continues to rely on fund balance for recurring expenditures.
• The City must seek written assurance from the State of New York Mortgage Agency that the Agency will transfer $11 million to the Municipal Bond Bank Agency for distribution to the City in accordance with the 2015 legislation for this aid. This funding source will likely not be available in future years, which results in a potential funding gap for 2017-18.
• Revenue estimates for sales tax may not be achievable.
• The budget includes raises in the metered water rates, sewer rents and real estate transfer taxes.
• The appropriations for tax certiorari settlements may not be adequate, the reserve for uncollected taxes may be underestimated, and the appropriation for police overtime may be underestimated.

Key Recommendations

• Work with District officials to assess appropriations for textbooks and contractual settlement costs.
• Develop a plan to maintain fund balance at a reasonable level.
• Seek written assurance from the State of New York Mortgage Agency that the Agency will transfer $11 million to the Municipal Bond Bank Agency for distribution to the City in accordance with the 2015 legislation.
• Review the revenue estimates for sales tax and amend as necessary.
• Pass a resolution to raise water rates, sewer rents and real estate transfer taxes prior to the adoption of the budget or lower the estimates for these revenues.
• Assess the sufficiency of appropriations for tax certiorari settlements, the reserve for uncollected taxes and appropriations for police overtime and amend as necessary.