Purpose of Budget Review
The purpose of our budget review was to provide an independent evaluation of the City’s proposed budget for 2018.
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, refuse, water and sewer 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.
- Based on the results of our review, except for matters described in this letter, the significant revenue and expenditure projections in the proposed budget appear reasonable.
- The City did not appropriate any fund balance as a funding source in the 2018 general, water, sewer, or refuse fund budgets and the estimated unrestricted fund balance is 13%, of 2018 general fund appropriations, which is below the City’s fund balance policy minimum of 17% of the following year’s budgeted appropriations.
- City officials did not provide cash flow estimates for 2018, which would have allowed the City to determine if unrestricted fund balances were adequate.
- Three of the City’s collective bargaining agreements (CBAs) have expired and 39 City employees are retirement eligible and due buyouts totaling up to $897,000, if they retire in 2018.
- The proposed budget includes $373,219 overtime appropriations for police, which is less than the $384,554 expended during the first nine months of 2017.
- Revenue estimates for sewer rents could be overstated by at least $300,000.
- The Common Council should consider whether the unrestricted fund balance is sufficient to meet any unanticipated expenditures that the 2018 contingency appropriation would not fund.
- City officials should prepare and analyze 2018 cash flow projections to determine if unrestricted fund balance is adequate for the water, sewer and refuse fund.
- The Common Council should consider whether the contingency appropriation is adequate if CBAs are approved and potential retirements occur.
- The Common Council should ensure police overtime appropriations are reasonable.
- Sewer rent rates may need to be increased or appropriations decreased.