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Audit: Missteps gave Long Beach $5M deficit

Long Beach City Hall on March 28, 2013.

Long Beach City Hall on March 28, 2013. Credit: Tara Conry

Widespread budgetary missteps led to Long Beach ending fiscal year 2012 more than $5 million in the red, according to the city's independent annual audit.

The report's summary listed 31 weaknesses in the city's financial structure that contributed to the deficit.

Long Beach officials, who discovered a deficit a few months after a change in city leadership in 2011, said the city has taken corrective action to fix all of the weaknesses, which ranged from unsustainable procurement practices to problems with the way the city handles its revenue streams.

City Manager Jack Schnirman, who was selected in December 2011, said the audit confirms the city's March 2012 projection that the city's annual operating deficit was $10.25 million in fiscal 2012. The audit places the figure at $9.2 million -- a number that takes into account the city's midyear budget cuts, he said.

James Hennessy, a spokesman and committeeman for the Long Beach Republicans who served on the City Council from 2004 to 2008, cited the $5.05 million fund balance deficit noted in the audit and said that proves Democrats overstated the severity of Long Beach's problems.

"They didn't need to declare a fiscal crisis," Hennessy said.

Schnirman said that claim was an attempt by Republicans to cover up their mismanagement.

The audit is "both shocking and educational" in that it "sheds light on how the finances of the city were able to deteriorate over a period of years," Schnirman said.

"It's good budgetary detective work," he said.

Long Beach's government changed from Republican to Democratic control with the November 2011 elections. City Manager Charles Theofan left at the end of the year. City officials discovered the deficit a few months later.

Attempts to reach Theofan were not successful.

The outside audit by Albrecht Viggiano Zureck & Co. of Hauppauge, required of every city and town in New York State, shows the city has a long way to go to repair itself financially, said Stephen Antaki, a partner with the auditing firm.

Antaki told the City Council Tuesday that the number of weaknesses was "substantial," adding, "You're not going to make that up in a year."

Schnirman said the city has a multiyear plan to address the audit findings.

Long Beach has moved toward a "return to structurally balanced budgeting" in the past year, Schnirman said.

The city council on Tuesday approved an $83.4 million budget that officials said allows the city to go forward with paying down its deficit.

The deficit is scheduled to be fully paid off by 2015, Schnirman has said.

The fiscal 2013-14 budget carries a 1.5 percent tax increase.

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