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 2019 fiscal year are reasonable.

Background

The City of Newburgh, located in Orange County, is authorized by Chapter 223 of the Laws of 2010 to issue debt not to exceed $15 million to liquidate the accumulated deficit in the general fund as of December 31, 2010. During the time that Chapter 223 is in effect, the City’s proposed annual budgets must be submitted to the State Comptroller for examination and recommendations. 

Key Findings

• The significant revenue projections in the proposed budget are reasonable. However, there were errors in the projections for expenditures that should be addressed prior to adoption of the budget.
• The City underestimated pension costs by $576,193.
• The proposed budget did not include $841,622 in general fund debt service that was on the City’s debt schedule.
• Based on our projections, the amounts budgeted for police and firefighting overtime is likely underestimated by $830,000.
• City officials have not included adjustments for the amount of taxes estimated to be uncollected and unavailable to finance the budgetary appropriations.
• The City continues to budget minimal amounts for contingencies, which provides limited flexibility to address revenue shortfalls or unforeseen expenditures.
• The City faces potential increased salary costs when one of its expired collective bargaining agreements is settled.
• The City’s proposed budget does not comply with the tax levy limit.

Key Recommendations

• Adjust the retirement appropriation to reflect actual pension costs.
• Add $841,622 to the proposed general fund budget for the debt payment, or transfer funds as appropriate.
• Modify the budget for police and firefighting overtime to be more consistent with past overtime costs.
• Include a tax overlay of $2,275,000 for to collect what is needed to fund operations.
• Review the adequacy of contingency appropriations.
• Consider the potential financial impact of the settlement of collective bargaining agreements when finalizing the 2019 budget.
• Be mindful of the legal requirement to maintain the tax levy increase to no more than the tax levy as permitted by law, unless it obtains the proper approval to override the tax levy limit.