[read complete report – pdf]

Purpose

The purpose of our budget review was to provide an independent evaluation of the City’s proposed budget for 2024-25.

Background

Chapter 531 of the Laws of 2019 authorizes the City to issue debt not to exceed $8.3 million to liquidate the cumulative deficits in the City’s general, transportation, sewer and recreation funds accumulated as of June 30, 2018. Additionally, Chapter 531 requires the City to submit to the State Comptroller, starting with the fiscal year during which it was authorized to issue the deficit obligations, and for each subsequent fiscal year during which the deficit obligations are outstanding, its proposed budget for the next succeeding fiscal year.

Key Findings

• The significant revenue and expenditure projections in the 2024-25 proposed budget are reasonable. However, we identified certain revenue and expenditure projections and other matters that should be reviewed by the Mayor and Council. 
• City officials did not implement all recommendations in our previous budget review letter when preparing the 2024-25 proposed budget. 
• The Mayor submitted the 2024-25 proposed budget to the Council on April 22, 2024, or 21 days after the Charter-established deadline.
• The proposed budgets for the general and recreation funds are not structurally balanced because they include subsidies from other funds to finance their operations.
•  We project that the City’s estimates for its share of Social Security and Medicare taxes have been underestimated by $65,874.
• The proposed budget allocates appropriations for personal services, contractual expenditures and employee benefits between the operating funds using unsupported allocation methods.
• The City’s proposed budget includes a tax levy of $6,389,710, which is within the legal limit.

Key Recommendations

• Ensure future proposed budgets are submitted to the Council on or before the deadline.
• Continue to evaluate and explore ways to make the general and recreation funds self-sufficient.
• Review Social Security and Medicare appropriations and make modifications as necessary.
• Develop an allocation plan based on detailed analysis that ensures costs allocated to each fund are directly related to its operations.