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Purpose of Budget Review

The purpose of our budget review was to identify issues which impact the City of Yonkers’ financial condition in the current and future years. 

Background

The Office of the State Comptroller, as Fiscal Agent for the City of Yonkers (City), determined that the City’s adopted budget for fiscal year 2024-25 and the related justification documents are in material compliance with the requirements of the Fiscal Agent Act (Chapter 488 of the Laws of 1976). The City’s 2024-25 budget totals $1.51 billion. The budget includes operating and debt service funding of $794.2 million for the Yonkers Public Schools (District) and $719 million for the City. The 2024-25 budget is $81.2 million more than the City’s budget for 2023-24, an increase of 5.7 percent.

Key Findings

• The 2024-25 budget relies on nonrecurring revenue of $133.5 million, such as appropriated fund balance, one-time State and Federal funding, and sale of property, to balance its budget. 
• The City could face a total revenue shortfall of approximately $2.6 million if revenue estimates are not realized.
• The City plans to borrow up to $15 million for tax certiorari settlements in the 2024-25 fiscal year. Tax certiorari is the legal process by which a property owner can challenge the real property tax assessment on a given property to reduce its assessment.
• The City has likely underestimated police overtime costs by as much as $2 million, employee retirement costs by as much as $945,000, health and dental insurance costs by as much as $195,000, social security costs by as much as $194,000 and firefighting overtime costs by as much as $131,000.
• The City should be mindful to ensure appropriations are sufficient for any potential liabilities when contract agreements for collective bargaining agreements are reached.
• The City’s contingency reserve is less than 1 percent of the City’s general fund budgeted appropriations; leaving a limited flexibility to cover any other unforeseen or unexpected costs.
• Since 2016, the growth of the City’s total outstanding debt has increased the annual debt service obligations by $23.4 million, or 30.2 percent. The City will need $100.8 million to service its debt obligations during 2024-25.

Key Recommendations

• Replace nonrecurring revenue, such as fund balance, in the 2025-26 budget.
• Develop a plan to address potentially significant revenue shortfalls.
• Pay tax certiorari claims from annual appropriations instead of using debt.
• Review the estimates for police overtime, employee retirement, health and dental insurance, social security firefighting overtime and contractual appropriations and adjust them to an appropriate level as necessary.
• Consider establishing a contingency appropriation at a level that will provide the City with adequate funding for any significant unforeseen costs.