[read complete report – pdf]

Purpose

The purpose of our budget review was to provide an independent evaluation of the City’s proposed budget for 2024.

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.
• Officials significantly underestimated the amount of overtime incurred by the fire department in 2023, which we estimate will exceed the amount budgeted by approximately $440,000. The proposed 2024 budget includes overtime funding of $500,000 for the fire department, an increase of $250,000. If officials cannot reduce overtime expenditures, the 2024 budget appropriation for overtime will be insufficient.
• The proposed 2024 budget includes appropriations for ambulance services including funding for the addition of four new firefighters. Officials plan to fund these services with a “public safety service fee”, which includes projected payments from Medicaid, Medicare and traditional health plans for services rendered to individuals with health insurance coverage.
  • City officials, including the Mayor, Director of Finance, and Fire Chief, stated that they intend to purchase one new ambulance each year for three years but they have not yet developed a written capital plan for purchasing and replacing ambulances.
  • The 2024 proposed budget includes estimated ambulance services revenues totaling $1,025,786 developed based on an average of conservative and expected revenue models. However, City officials do not have historical ambulance services data to use to estimate these revenues and as of October 11, 2023, the City is not an approved Medicaid provider.
  • As of September 30, 2023, the City collected ambulance services revenue totaling $345,035 and according to information provided by City’s third-party medical biller, the City has an outstanding receivable balance of $905,384, of which $266,154 is over 90 days past due and may be uncollectible.
• The City’s proposed budget includes a tax levy of $13,482,810.

Key Recommendations

• Ensure that the adopted 2024 budget includes reasonable overtime appropriations.
• Monitor and control the City’s 2024 overtime expenditures to ensure they do not exceed the City’s budget.
• Consider whether ambulance service revenues will be adequate to finance the additional costs of new equipment, vehicles and personnel costs.
• Consider using the conservative model and potentially uncollectible ambulance service fees when estimating revenues.
• 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.