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Purpose of Budget Review

The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the City’s 2021 proposed budget.

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 City’s proposed budget includes appropriations of $67,066,159.
• The City’s use of approximately $4.6 million of fund balance to close gaps in the budget decreases the fund balance that is available to cover unforeseen circumstances.
• The City could potentially face shortfalls based on revenue estimates for sales and use tax.
• Budgeted overtime funding for firefighters ($1.2 million) and police ($1.1 million) is likely underestimated by a total of at least $802,000.
• The proposed $344,377 in contingency appropriations may not cover unexpected expenses due to current economic conditions and uncertainties.
• Under the proposed 2021 budget, the City will have exhausted at least 92.2 percent of its Constitutional Tax Limit (CTL). If the adopted levy increases to above 100 percent of the CTL, the City will exceed its CTL and could lose some of its State funding.

Key Recommendations

• Develop a plan to maintain fund balance at a reasonable level to ensure funds are available in case of unanticipated expenditures or a shortfall in revenue.
• Review the revenue estimate for sales and use tax and amend as necessary.
• Pass a resolution to raise water rates prior to the adoption of the budget, or lower the estimate for metered water sales revenue.
• Adopt a budget that includes a tax levy no greater than the CTL.
• Adopt a budget that includes a tax levy no greater than the tax levy limit (tax cap), unless a local law is adopted to override the limit.
• Review the estimates for firefighting and police overtime and increase them as appropriate, or implement changes in procedures to manage costs within budgeted amounts.
• Review the estimate for contingency and adjust it to an appropriate level if needed.