A state comptroller’s report has improved Long Beach’s financial rating and removed it from the level of fiscal stress, but city officials remain concerned that the city is not yet on a stable footing.
Comptroller Thomas DiNapoli’s report said Long Beach and Utica improved their scores last year and pulled themselves out of the fiscal stress level. But the report said that both cities, as well as Syracuse, “are in close proximity to susceptible fiscal stress.”
Long Beach has turned around its finances since being on the verge of bankruptcy at the end of 2011. The city’s financial situation then was blamed on fiscal mismanagement by the prior administration that spent the city’s reserves and accumulated debt.
In the state report, which was released last week, the city’s fiscal stress rating for 2015 was upgraded to “moderate” after two straight years of “significant fiscal stress” that occurred while city leaders dealt with a $15 million deficit.
However, even with that modest improvement, city leaders say they believe the city may still not be on a stable fiscal footing, even after the budget this year posted its first $7 million general fund surplus.
“We’re happy to see significant improvement of our fiscal stress score this year,” Long Beach City Manager Jack Schnirman said. “We agree with the state comptroller warnings across the state and plan to take a more conservative outlook focusing solely on annual operations.”
City officials cautioned that the city’s finances have been bolstered through federal emergency funding to help rebuild infrastructure after superstorm Sandy. Officials cautioned that a one-year windfall is not sustainable and stressed the importance of maintaining a long-term recovery plan.
“Due to how we manage our recovery from Sandy, we were provided with a short-term infusion to our rainy day fund,” Schnirman said.
The scores are based on a combination of the city’s 2015 year-end balance, short-term borrowing, operating deficits and overall fiscal health. Those scores are then converted into percentages to reflect the city’s fiscal stress in each area.
Long Beach was rated at 33 percent in 2015 and projected at 10.8 for 2016. This means, for example that, for 2016, 10.8 percent of the city’s finances are within fiscal stress category.
The comptroller started the ratings for 2012, when Long Beach’s fiscal stress level was rated at 95 percent. It improved to 80 percent in 2013 and 57.5 percent in 2014.
Long Beach officials said the comptroller’s ratings could have predicted the city’s economic collapse in 2010 or 2011.
“Long Beach was one of the most fiscally stressed in the state. We think the fiscal stress test is a terrific tool for local government,” Schnirman said. “Had it existed earlier, it would have served as an early warning system for Long Beach and other municipalities.”
In 2015, the city had $7 million in its unassigned general fund balance and $4 million set aside for water and sewer funds. The city had $84 million in expenditures that year.