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 2021-22 fiscal year are reasonable.
Background
The City of Yonkers is authorized to issue debt not to exceed $45 million to liquidate 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
Our review found the City’s budget:
- Continues to rely on $46.8 million in nonrecurring revenue, such as fund balance, one-time State funding and sale of property, to balance its budget.
- Includes revenue estimates for income tax surcharge, city and state mortgage tax, sales and use tax and sales and use tax-education, parks, real estate transfer tax, sewer rents and metered water sales that may not be achievable.
- Results in additional debt and interest costs because the cost of tax certiorari claims are bonded instead of being financed through the operating budget.
- Likely underestimated firefighting overtime and police and fire retirement appropriations.
- Includes no appropriation for contractual settlements. All eight of the City’s union collective bargaining agreements have expired. The City could face additional expenditures when these contracts are settled.
- Includes a tax levy of $391.8 million, which is $3.4 million from exceeding the tax levy limit.
The City’s proposed budget also includes the Yonkers Public School District’s (District’s) budget. Our review also found the District’s $660.1 million budget:
- Has a budget gap of at least $8.6 million.
- Relies on $12 million of additional State aid for services and expenses, which may not be available in future years.
- Includes no appropriation for contractual settlements, although all four of the collective bargaining agreements expire June 30,2021. The District will need to find a funding source for any additional expenditures when contract agreements are reached.
- Likely underestimated charter school tuition payments by approximately $336,000.
Key Recommendations
- Develop a plan to maintain fund balance at a reasonable level and discontinue the practice of relying on one-time revenues to finance recurring expenditures.
- Review the estimates for income tax surcharge, city and state mortgage tax, sales and use tax and sales and use tax-education, parks, real estate transfer tax, sewer rents and metered water sales and amend as necessary.
- Adjust the appropriation for tax certiorari payments and provide a financing source for tax certiorari refunds or settlements.
- Review the estimates for firefighting overtime and police and fire retirement and amend as necessary.
- Consider adding an appropriation for the potential exposure related to contractual settlements.
- Eliminate the $8.6 million budget gap in the District’s budget request.
- Develop a plan to fund District operations and discontinue the practice of relying on one-time revenues to finance recurring expenditures.
- Consider adding an appropriation for the potential exposure related to contractual settlements.
- Review the estimate for charter school payments and amend it as necessary.