Poor budgeting by the City of Long Beach's former Republican-led administration created an $18-million, multiyear deficit and exhausted $21 million in rainy day funds, according to a state comptroller's audit report.
Auditors found the prior administration enacted budgets for fiscal years 2008 to 2012 with "unrealistic" estimates of revenues and expenditures, and relied on inter-fund advances, budget notes and long-term financing to fund operations, according to the report released yesterday. The audit was requested by city officials and conducted before the damage done by superstorm Sandy.
"As Long Beach continues to recover from the devastation caused by superstorm Sandy, city officials must also battle to undo the long-term damage done to their budget," state Comptroller Thomas DiNapoli said in a statement.
From 2008 to 2012, revenues were overestimated by more than $12 million and actual expenditures exceeded budgeted appropriations by $2.8 million. Also, the total unexpended surplus decreased by almost $21 million, from a surplus of $6 million to a deficit of $14.8 million.
Long Beach City Manager Jack Schnirman, who was hired by the Democrat-controlled government that came into office in January 2012, said the audit "validates and illuminates the areas of concerns we identified in the first few months of this administration. . . . Clearly, the prior administration did not properly budget revenues and expenses."
The audit also found that the city did not plan for $4.2 million in separation payments for retiring employees, resulting in the State Legislature authorizing the city in July 2012 to issue bonds payable over five years to finance the costs. City officials also underestimated overtime salaries by a total of $3.4 million.Jim Hennessy, a former city council president and now spokesman for Long Beach Republicans, said the difficult economy forced officials to make tough choices.
"We used the rainy day fund so that we didn't have to raise taxes on people during the recession," he said. "I find it very ironic that the comptroller who recommends using surplus to offset tax increases would criticize what we did."
Hennessy said the city's own audit report found the city had a $5 million deficit for 2011-12. He said the comptroller's audit found 97 outstanding checks, including one for $650,942 dating to November 2011, which remained outstanding as of October 2012.