Long Beach mulls option to plug budget gap

The State Legislature's decision to prevent Long Beach from borrowing money to plug its budget gap has left city officials scrambling for an alternative -- and faulting state leaders for putting politics before tax relief.

The city, which faces a $10.25 million deficit, had sought state deficit financing so it could borrow the money and pay it back over 10 years at a low interest rate.

But a bill to enable the borrowing died in the State Senate rules committee on Thursday, when the legislative session ended.

City leaders are now looking for an alternative way to pay down the deficit, which could mean a tax increase, city manager Jack Schnirman said Monday.

He and Assemb. Harvey Weisenberg (D-Long Beach) said it appeared Republicans opposed the bailout of Long Beach, a Democrat-controlled city, because Democrats in the State Assembly opposed a measure to aid Republican-led Nassau County.

A proposal to allow Nassau County Executive Edward Mangano to bypass a state financial control board and borrow money to pay $41 million in property-tax refunds also died on the last day of the legislative session.

"We're extremely disappointed that it appears politics is interfering with this routine approval," said Schnirman, who was hired by the Democratic administration that took office on Jan. 1.

Sen. Dean Skelos (R-Rockville Centre), chairman of the rules committee and the Senate majority leader, introduced Long Beach's borrowing bill, but said after it failed that he only did so "as a courtesy" to the city. Skelos and the senate Republicans do not believe borrowing is a wise way to get out of debt, said Scott Reif, a spokesman for Skelos.

"Our position is you get your fiscal house in order through reducing spending," Reif said.

Long Beach's city council last month passed a 2012-13 budget that included a 7.9 percent tax hike, contingent on the plan to pay down the deficit over 10 years using deficit financing. The city may instead have to approve a three-year deficit paydown that would put the tax increase at 14.5 percent, Schnirman said.

The city does not have to make a decision immediately, and will look for other options, he said.

Weisenberg said it is unfortunate that Long Beach residents will likely face a steeper tax increase now that deficit financing is unavailable.

"These guys didn't cause the financial mess that exists, they inherited it," he said.

Karen McInnis, vice president of the West End Neighbors Civic Association, said the lack of deficit financing will make it harder for the city to dig out of its fiscal crisis.

"I equate this situation with Senator Skelos to 'Ford to City: Drop Dead,' " McInnis said. "It's a very unfortunate situation."