The New York State comptroller kept Long Beach near the top of its list of "fiscally stressed" municipalities, warning of deteriorating funds and rising debt.
Long Beach was the second most fiscally stressed community in the state in 2018, ranked only behind the upstate city of Amsterdam. The state gave Long Beach the same fiscal stress score of 80.8 percent fiscally stressed as it did in 2017.
The fiscal stress score took into account Long Beach’s 2018-19 budget, deteriorating fund balance, operating deficits, cash position, short-term cash flow debt and fixed costs.
On Long Island, the villages of Valley Stream and Island Park were found to be in moderate fiscal stress. Valley Stream's bond rating was downgraded last month to junk bond status by Moody's Investors Service.
Long Beach passed a 2018-19 $95 million budget with an 8.3 percent tax hike. The city has for the past several years operated under unbalanced budgets and relied on an influx of disaster funding following superstorm Sandy. Long-term debt now stands at about $100 million.
Long Beach Acting City Manager Rob Agostisi, who was appointed last month, said he is preparing the city’s 2019-20 budget, which the city council will vote on in May. He said he is interviewing multiple candidates to fill the city’s comptroller position, which has been vacant since July 2017.
“The structural imbalance existed in the city for a very long time, and it’s not sustainable. It can’t go on indefinitely,” Agostisi said. “The city has to find recurring revenue streams to support the current staffing levels and cost structure.”
Moody's downgraded Long Beach’s bond rating last month, citing concerns the city could exhaust $1.4 million in reserves by the end of June.
The state found that the city increased debt service from 2017 to 2018 and ended with less cash on hand. The city’s fund balance dropped from $6.4 million in 2017 to $1.8 million in fiscal 2018, according to the comptroller’s office.
The state comptroller is conducting two audits of the city’s finances. The first audit, focusing on its practice of payouts and drawdowns of accrued time to current and former employees, is expected to be released this summer. A second audit on the city’s financial condition is expected by the end of the year, comptroller officials said.
Agostisi said he is trying to bring a group of financial specialists for the first time in the city’s history for long-term financial strategic planning. He said the two straight years of fiscal stress mark the need for a turning point.
“I think we’re very close to stopping the financial hemorrhaging," Agostisi said, "and the upward cycle is poised to begin.”