Officials: Long Beach may miss payroll, start layoffs after bond fails

The Long Beach City Council Tuesday night failed to pass $2.1 million in bonds to fund compensation for departing employees, prompting warnings the city could shut down next month and layoff police officers, firefighters and other workers.

The board voted 3-2 for the resolution, which required four votes to pass. Council members John Bendo and Anissa Moore voted no.

City Council President Anthony Eramo said by failing to pass the bond, which would have helped fund Long Beach through the end of the fiscal year, the city may not make payroll and be forced to begin layoffs.

“There are going to be shutdowns,” Eramo said. “There are potentially going to be layoffs.”

The $2.1 million in bonds is roughly the amount already paid out from the general fund in retirement or other compensation to workers who have left the city or plan to leave soon.

Acting City Manager Michael Tangney said the bonds would have replenished the fund. Without them, the city could run out of money before the next budget is passed in May, Tangney said.

“When an employee leaves service they have to be paid out for their service,” Tangney said. “This bond encompasses all the people who separated and we are obligated to pay. This money has been spent, failure to pass this bond means we will not meet payroll. We will be broke by the end of the year.”

The “separation payments” have been made since the current budget passed in July 2017. Former comptroller and city consultant Kristie Hansen-Hightower said the bonds were critical to meet payroll, health insurance and Workers’ compensation payments by next month to fund the city through June 30.

Most of the city’s rainy day funds were tied up in disaster-relief funding projects after superstorm Sandy. Long Beach is awaiting reimbursements from the state and federal government for many of those Sandy projects.

“Whatever rainy day fund is there needs to be left for unforeseen emergencies,” Hansen-Hightower said.

Long Beach cannot retract any of the compensation payments already made to former city employees.

“If we don’t borrow it by the end of next month, the cash flow situation will be dire,” Hansen-Hightower said.

Councilwoman Anissa Moore asked why the council wasn’t informed the city could run out of funds at the time the 2017 budget was passed.

Former Long Beach City Manager and now Nassau County Comptroller Jack Schnirman is included in the separation payments. He was paid $108,000 for accrued vacation and sick time. His contract ran through Dec. 31.

Bendo said the city charter was violated for payments made to Schnirman.

Tangney said it accounts for unused vacation and sick time accrued during Schnirman’s six years as city manager. He was sworn in as comptroller Jan. 1.

“I haven’t seen any justification for the amounts listed here,” Bendo said.

Councilwoman Chumi Diamond said the compensation payments were allocated to avoid a tax increase and planned for future bonding. She said not paying separation payments would open the city years to litigation.

“The problem is we all entered into a budget that included separation pay, because it is an enormous bill that if converted into a tax increase would be unmanageable to residents,” Diamond said. “This was planned to get us through the end of the year. No one wants to wake up in a city that doesn’t know how it will continue to function.”

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.