[read complete report – pdf]

Purpose

The purpose of our budget review was to provide an independent evaluation of the City’s proposed budget for 2023.

Background

Chapter 332 of the Laws of 2014, as amended by Chapter 147 of the Laws of 2015 (the Act), authorized the City to issue debt to liquidate the accumulated deficits in the City’s general, water, sewer and refuse funds as of December 31, 2013. The Act requires the City to submit to the State Comptroller each year, beginning January 1, 2015, and for each subsequent fiscal year during which the debt incurred to finance the deficit is outstanding, the proposed budget for the next succeeding fiscal year.

Key Findings

• Based on the results of our review, except for matters described below, the significant revenue and expenditure projections in the proposed budget appear reasonable.
• For 2022, City officials project an operating loss in water fund.
• City officials estimate unrestricted fund balance in the general fund will total $8.6 million as of December 31, 2022, which is 31.4 percent of 2023 general fund appropriations included in the proposed budget and complies with the City’s fund balance policy requirement of 17 percent of the of the following year’s budgeted appropriations.
• If the City’s 24 retirement-eligible employees retire in 2023, they will be due buyouts averaging $25,000 per retiree, totaling $600,000. The City has included $500,000 in the 2023 proposed general, water and sewer budgets to fund buyouts.
• The City increased the contingency appropriation this year for real property tax assessment refunds to provide funding in the event that property owners who have filed petitions for tax assessment reviews are successful in reducing their real property assessments and are entitled to refunds that could total $337,190. The result of these petitions will not be known until the middle of the 2023 fiscal year.
• The proposed budget contains contingency appropriations of $108,779 (2.51 percent of appropriations) and of $110,290 (2.63 percent of appropriations), for the water and sewer funds, respectively.
• The City’s proposed budget includes a tax levy of $13,374,596.

Key Recommendations

• Carefully monitor revenues and expenditures and make adjustments as needed throughout the year.
• Assess what fund balance is reasonable for their situation, considering various factors such as the timing of receipts and disbursements and the volatility of revenues and expenditures.
• Consider whether the contingency appropriations are adequate if unanticipated retirements occur and/or refunds from property tax assessment reviews are greater than expected.
• Be mindful of the legal requirement to maintain the tax levy increase to no more than the tax levy limit as permitted by law, unless it properly overrides the tax levy limit prior to adopting the budget.