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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 2022 proposed budget were 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 City’s proposed budget includes appropriations of $77,304,254.
• The City’s use of approximately $7.3 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 parking violation fines, sanitation user fees, sewer usage and sale of metered water.
• Based on projections, the health insurance appropriation is likely underestimated by $442,000.
• Budgeted overtime funding for firefighters ($1.5 million) and police ($1.4 million) is likely underestimated by a total of at least $359,000.
• All four of the City’s collective bargaining agreements are set to expire at the end of 2021. The City faces potential increased salary and wage costs when these agreements are settled.
• The proposed budget does not include a contingency appropriation in the general fund.
• The proposed budget does not include a tax overlay, which could potentially create a revenue shortfall in 2022.
• The proposed budget includes a tax levy of $23,023,561, which is $33,061 from exceeding the tax levy limit.

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 parking violation fines, sanitation user fees, sewer usage, and sale of metered water and amend as necessary.
• Review the estimate for health insurance and increase it to an appropriate level as necessary.
• 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 of contractual appropriations and adjust it to an appropriate level as necessary.
• Consider including a reasonable estimate for contingencies, as well as establishing a reasonable estimate for a tax overlay, in the budget.