State report says Long Beach in ‘significant fiscal stress’

Long Beach officials were given a stark warning by state officials ahead of their budget talks next month that the city’s fiscal stress could lead to an increase in taxes or a reduction in services.

The state comptroller’s report for the 2016-2017 fiscal year, which ended June 30, found the city was in “significant fiscal stress” for its depleted general funds and mounting expenses.

Long Beach officials have remained silent on their current budget plans, which will be presented in May ahead of a city council vote expected later that month. City officials acknowledged that an increase in taxes and cuts in services are both possibilities, city spokesman Gordon Tepper said Thursday.

City officials have long cautioned the city’s finances were not yet on stable footing, even after it was removed from the comptroller’s fiscal stress watch list two years ago. The city received an influx of state and federal disaster relief funds following superstorm Sandy in 2012, but is still waiting for some storm reimbursements.

“We are reviewing the rating and its criteria,” the city said in a statement. “It is our understanding that pending Sandy reimbursements from New York State and FEMA would have materially affected the rating. We expect to learn additional details in the coming weeks.”

Comptroller Thomas DiNapoli reviewed the city’s finances, including its 2017 $90.1 million budget, which carried a 6.2 percent tax hike when it was passed in 2016. The comptroller’s office found the city had $78 million in expenditures compared with slightly over $2 million in its general fund balance, according to the report.

State officials said the system is used to look for warning signs of fiscal crisis to allow residents and communities time to prepare their finances.

“When you have a deteriorating financial condition, it can lead to increase in taxes and cuts in service,” state comptroller spokesman Brian Butry said. “This system was developed to give residents a heads up where municipalities are on a year to year basis so communities can plan for their budgets and craft a multiyear plan.”

The city council passed a $93.5 million budget with a 1.26 percent tax hike for the current fiscal year, which runs through June.

City council members plan to review two proposals for up to $6 million in bonds at its April 17 meeting. The bonds would give the city $4 million to pay for the construction of the boardwalk until it can be reimbursed by the Federal Emergency Management Agency. Another resolution would issue bonds for retirement payouts. Both motions would require at least four of five votes to pass.

By John Asbury

john.asbury@newsday.comJohnAsbury

John Asbury is a breaking news and general assignment reporter. He has been with Newsday since 2014 and previously worked at The Press-Enterprise in Riverside, California.