Purpose of Budget Review

The purpose of our budget review was to provide an independent evaluation of the Village’s preliminary budget for the 2015-16 fiscal year.

Background

Chapter 646 of the Laws of 2006 authorizes the Village of Hempstead (Village) to issue debt totaling $4.2 million to liquidate the accumulated deficit in the Village’s general and water funds as of May 31, 2005. Local Finance Law Section 10.10 requires all local governments that have been authorized to issue obligations to fund operating deficits to submit to the State Comptroller each year, starting with the fiscal year during which the local government is authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, their proposed budget for the next succeeding fiscal year.

Key Findings

• Based on the results of our review, we found the significant revenue and expenditure projections in the proposed budget are reasonable.
• Based on the 2015-16 proposed budget, the Village will have exhausted 91.32 percent of its taxing authority. The Village’s ability to rely on real property taxes as an increased revenue source in the future is limited.
• The Village’s proposed budget includes a tax levy of $64,397,475, which exceeds the allowable tax levy limit.
• The Village’s proposed budget includes the use of $500,000 from the tax stabilization reserve to lessen the real property tax levy. The Board has not yet adopted a resolution to use the reserve.

Key Recommendations

• Amend the proposed budget or adopt a local law overriding the tax levy limit before adopting the proposed budget.
• Adopt a resolution to use the tax stabilization reserve to lessen the real property tax levy.