Purpose
The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the City’s proposed budget for the 2022-23 fiscal year are reasonable.
Background
The City of Yonkers is authorized to issue debt not to exceed $45 million to liquidate current deficits in the City School District’s general fund as of June 30, 2014. Chapter 55 of the Laws of 2014 requires the City to submit its proposed budgets for the next fiscal year to the State Comptroller and the Commissioner of Education for review while the deficit obligations are outstanding.
Key Findings
The significant revenue and expenditure projections in the proposed budget are unreasonable. In addition, officials’ continued practice of using debt to pay for recurring costs is imprudent. Our review found the City’s budget:
- Continues to rely on $124.4 million in nonrecurring revenue, such as appropriated fund balance, one-time State funding, one-time Federal funding and sale of property, to finance its operations.
- Includes revenue estimates for income tax surcharge, sewer rents and metered water sales that may not be achievable.
- Results in additional debt and interest costs because the cost of tax certiorari claims are bonded instead of being financed through the operating budget.
- Likely underestimated police and firefighting overtime.
- Includes $33.7 million for contractual settlements. Seven of the City’s eight union collective bargaining agreements (CBAs) have expired. The City could face additional expenditures when these contracts are settled.
- Includes $86.2 million to service its debt obligations during 2022-23. This amount represents about 6.3 percent of the City’s annual budget.
- Includes a tax levy of $402,154,152, which is equal to the tax levy limit.
The City’s proposed budget also includes the Yonkers Public School District’s (District’s) budget. Our review found the District’s budget:
- Has a budget gap of at least $7.4 million.
- Relies on $12 million of additional State aid for services and expenses, which may not be available in future years.
- Does not include any appropriation for contractual settlements, although three of the District’s CBAs expired June 30, 2021 and one of the District’s CBAs expires June 30, 2022. The District could face additional expenditures when these contracts are settled.
- Likely underestimated charter school tuition payments by approximately $1.6 million.
Key Recommendations
- Develop a plan to maintain fund balance at a reasonable level and discontinue the practice of relying on one-time revenues to finance recurring expenditures.
- Review the estimates for income tax surcharge, sewer rents and metered water sales and amend as necessary.
- Consider adjusting the appropriation for tax certiorari payments and provide a financing source for tax certiorari settlements.
- Review the estimates for police and firefighting overtime and amend as necessary.
- Review the estimate for contractual settlements and amend as necessary.
- Review the outstanding debt and review alternatives to borrowing.
- Eliminate the $7.4 million gap in the District’s budget request.
- Review the estimate for charter school payments and amend it as necessary.