Brown: Of mice and mire, the outlook on Long Beach
Things are looking up for Disney's House of Mouse.
For the City of Long Beach, not so much.
Disney and the City by the Sea both were featured in last week's "Credit Outlook," a roundup by Moody's Investors Service, a Wall Street bond-rating agency, which keeps track of such things.
A section on coronavirus — no surprise — grabs the top spot in the roundup's news and analysis section. Moody's, among other things, delved into the virus' impact on Korea (where it is adding pressure to corporate earnings and economic grown), and on Italy (where it has had limited effect on banks, a situation that could change with wider contagion).
Disney shows up in the next section, corporates, where Moody's notes that the company's decision to name Bob Chapek as the new chief executive officer was "credit positive" — because it removed uncertainty about who would succeed longtime CEO Robert Iger in the post.
Iger was raised in Oceanside, which is four miles away from Long Beach (which, by chance, makes for a blissfully easy transition sentence).
But I digress.
Long Beach appears in the final section of the roundup, U.S. public finance, where Moody's notes that the city's having to hire a third city manager in as many years is, well, not a great thing.
On Feb. 27, the report notes, the city council "approved the hiring of a new city manager after the acting city manager informed the council three days earlier that he would step down and return to his full-time job in the Department of Public Works."
"His departure," it goes on, "means the city will have lost three city managers since 2017."
In this instance, the former acting city manager decided to leave the CEO position and return to public works — a route trod rarely, even across the ever-fascinating landscape of Long Island municipal governance.
But here's the rub for city residents, according to Moody's.
"The management turnover is a contributing factor in the city's structurally unbalanced operations and makes the prospect of a financial recovery more difficult," the report notes.
And that makes the lack of steady governance "a credit negative for the city."
As it is, Long Beach has been borrowing to cover operating expenses.
And city reserves, while stable, are not where they should be.
Long Beach has yet to produce, much less hand up, a state-mandated multiyear financial plan.
Residents have seen property tax increases, compounded over two years, at just shy of 19 percent, as part of the city's effort to stabilize its rainy day fund.
Even so, according to Moody's, the city's water and sewer funds "have also deteriorated and are out of cash," according to unaudited 2019 figures.
Meanwhile, both Nassau's district attorney's office and the U.S. Attorney are investigating payouts the city made to former officials, and others, that appear to violate the city's own charter.
Enter Donna Gayden, the city's latest interim manager, who was hired last month with a mandate to, in the words of a city news release, "turn around the city's finances after years of structural deficits, mismanagement and scandal."
Gayden has said in news reports that she wants to work with the city council — which is considering taking on some powers now accorded to the city manager — to find ways to balance the budget.
She wants to do so without borrowing money — in a city where outstanding debt, from 2013 to 2018, ballooned to $112.5 million from $50.6 million.
Gayden has signed a six-month contract, under which she can be hired for at least one additional three-month period. (Iger lasted as Disney CEO from 2005 to 2020. Just sayin'.)
Will Gayden have enough time?
"She will be here for as long as it takes," a city spokesman said.
The Moody's credit outlook report, it bears noting, was not a bond-rating action.
In short, the city's rating did not go up, and it did not go down.
But if finances don't stabilize, it could — right back down to the one-step-above-junk-bond rating that Long Beach held, and not so very long ago.