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Purpose of Budget Review

The purpose of our budget review was to identify issues which impact the City of Yonkers’ financial condition in the current and future years. 

Background

The Office of the State Comptroller, as Fiscal Agent for the City of Yonkers (City), determined that the City’s adopted budget for fiscal year 2023-24 and the related justification documents are in material compliance with the requirements of the Fiscal Agent Act (Chapter 488 of the Laws of 1976). The City’s 2023-24 budget totals $1.43 billion. The budget includes operating and debt service funding of $733.8 million for the Yonkers Public Schools (District) and $698.2 million for the City. The 2023-24 budget is $52.1 million more than the City’s budget for 2022-23, an increase of 3.8 percent.

Key Findings

• The 2023-24 budget relies on nonrecurring revenue of $141.5 million, such as appropriated fund balance, one-time State funding, and sale of property, to balance its budget. 
• The City could face a total shortfall of approximately $5.7 million if revenue estimates are not realized.
• The City plans to borrow up to $15 million for tax certiorari settlements in the 2023-24 fiscal year. Tax certiorari is the legal process by which a property owner can challenge the real property tax assessment on a given property to reduce its assessment.
• The City should be mindful to ensure appropriations are sufficient for any potential liabilities when contract agreements for collective bargaining agreements are reached.
• The City’s contingency reserve is less than 1 percent of the City’s general fund budgeted appropriations; leaving a limited flexibility to cover any other unforeseen or unexpected costs.
• Over the last 10 years, the City’s outstanding debt has grown 35 percent and the City’s debt service payments have risen 35.2 percent. The City will need $99.2 million to service its debt obligations during 2023-24.

Key Recommendations

• Replace nonrecurring revenue, such as fund balance, in the 2024-25 budget.
• Develop a plan to address potential significant revenue shortfalls.
• Pay tax certiorari claims from annual appropriations instead of using debt. 
• Review the estimate for contractual appropriations and adjust it to an appropriate level as necessary.
• Consider establishing a contingency appropriation at a level that will provide the City with adequate funding for any significant unforeseen costs.