Purpose of Audit
The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the City’s proposed budget for the 2015 fiscal year are reasonable.
The City of Glen Cove, located in Nassau County, issued debt totaling $12.8 million to liquidate various accumulated fund deficits for the fiscal year ending December 31, 2006. Local Finance Law requires all local governments that have been authorized to issue obligations to fund operating deficits to submit their tentative budgets for the next fiscal year to the State Comptroller for review while the deficit obligations are outstanding.
The 2015 proposed budget contains significant financial risks that the City Council should consider when adopting the 2015 budget.
- The City continues to finance operating expenditures, such as tax certiorari judgments and termination payments, with debt when it should be funding such expenditures with operating revenues.
- The City continues the practice of supporting operating expenditures with unrealistic revenue estimates and one-shot revenues.
- The budget includes estimated revenues from the sale of City property of $410,000 and the settlement of legal proceedings of $950,000 that might not be realized.
- The general fund budget does not appropriately budget and recognize the financing of $201,000 for debt service as a transfer from the originating funds.
- Develop a viable financial plan that is sustainable for the long term, which gradually decreases the unassigned fund balance deficit, and is less reliant on the issuance of debt and one-time revenues to resolve systemic structural imbalances in its budget.
- Present budgets that appropriately attribute interfund transfers in the correct fund.