Purpose of Budget Review
The purpose of our budget review was to provide an independent evaluation of the City’s proposed budget for 2021.
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, water, sewer and refuse 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.
- Continually evolving circumstances caused by the pandemic may require adjustments to the budget throughout the year as more information becomes available.
- The proposed budget includes State aid and sales tax estimated revenues of $2.1 million and $5.5 million, respectively, which may not be attainable.
- In 2020 the City lost an arbitration ruling that requires it to hire 12 firefighters. City officials told us they will hire four new firefighters each year from 2021 through 2023, but have not documented this in a written agreement with the collective bargaining unit.
- The total overtime appropriation in the proposed budget is $110,000 less than budgeted in 2020 and $55,000 less than projected for 2020. Also, the City is in negotiations to increase minimum staffing levels for the fire department, which may result in overtime.
- The proposed budget includes a negative appropriation of $317,287 for projected personnel turnover. This is not a conservative or appropriate budgeting method and could negatively affect the general fund budget.
- Two of the City’s collective bargaining agreements (CBAs) are nearing settlement and will likely be in place in 2021.
- The City has 29 retirement eligible employees and, if they retire in 2021, will be due buyouts totaling over $750,000. The City has included only $545,000 in the proposed budget to fund buyouts.
- The proposed budget does not include a tax overlay, which could create a shortfall in 2021.
- The proposed budget includes a tax levy of $13,174,703 which complies with the tax levy limit.
- Carefully monitor revenues and expenditures and make adjustments as needed throughout the year.
- Enter into a written agreement with the collective bargaining unit regarding hiring firefighters over a three-year period.
- Ensure overtime appropriations are reasonable when adopting the final budget.
- Remove the negative appropriation for personnel turnover from the budget, assess the accuracy of the original projection, and ensure the budget is balanced.
- Consider the CBAs nearing settlement and whether contingency appropriations are adequate if unanticipated retirements occur, and budget accordingly.
- Include a tax overlay in the adopted budget.