Despite some improvement in its financial management, the City of Glen Cove has made a state list of fiscally stressed local governments for the 10th time in 11 years.
The office of state Comptroller Thomas P. DiNapoli, in a report released Tuesday, said the North Shore city was "susceptible" to fiscal stress, citing cash reserves that were less than 5% of annual spending. "Susceptible" is the lowest of three categories for localities in danger of budget problems.
The city was one of only 14 local governments statewide cited this year in the comptroller's report. That includes five municipalities, including the Village of Huntington Bay, that were cited by the comptroller's office in March.
Glen Cove has made the list of fiscally stressed localities in all but one year since DiNapoli began issuing the reports in 2013.
Three Long Island localities cited in last year's report — Long Beach City and the villages of Valley Stream and Roslyn — dropped off this year's list. Long Beach had been cited each year since 2016 and had been designated the most fiscally stressed municipality in the state as recently as 2019.
In an email Wednesday, Glen Cove Comptroller Michael A. Piccirillo said city officials plan to build up a sufficient budget surplus in order to be removed from the list next year.
"Although our fiscal stress score for 2022 was maintained at the Susceptible designation, we have made a great deal of progress improving this matter over the last few years," Piccirillo said.
Tuesday's report gave Glen Cove a fiscal stress score of 47.1 out of 100 during the 2022 fiscal year, with 100 representing maximum stress. That was a slight improvement over the city's 2021 score of 50.4 and its 2020 score of 61.7.
Municipalities must receive a score under 45 to be classified as "no designation," meaning the comptroller's office found no concerns over debt or deficits.
The report faulted city officials for having only $2.2 million in reserves at the end of last year, or 4.3% of its $50.5 million annual budget. The comptroller's office recommends reserves should be at least 20% of annual spending.
The findings were included in DiNapoli's Fiscal Stress Monitoring System report, one of two so-called fiscal "stress test" reports issued annually by the comptroller's office. The reports collect self-reported data from counties, towns, cities, villages and school districts across the state.
The reports evaluate factors such as year-end fund balances, operating deficits, debt and personnel spending to assess whether municipalities are at risk of future financial pain.
The report noted that the overwhelming majority of towns and villages across the state saw their coffers swell with increased sales tax revenue and an influx of federal COVID-19 relief funds from the American Rescue Plan, or ARP. But it warned that the relief funds soon will dry up.
The consequences of poor fiscal management include lower credit ratings, which in turn raises borrowing costs, said Martin R. Cantor, director of the Long Island Center for Socio-Economic Policy in Melville.
Municipalities usually have only two options, he said — raise taxes or cut spending.
“I think everybody is kind of loath to increase taxes in this inflationary environment, but that’s what they need to do,” said Cantor, a former Suffolk County economic development commissioner. “I think it’s easier to cut expenses than go to the electorate and say, 'I have to raise your taxes.'”
All of Long Island's 13 towns and most villages received a "no designation" rating in Tuesday's report, meaning the comptroller's office found no significant concerns about deficits and debt.
Nine Long Island villages did not file reports, including Cedarhurst, Centre Island, East Rockaway, East Williston, Great Neck, Hempstead and Island Park in Nassau County, and Amityville and Lake Grove in Suffolk County, the report said.
In March, DiNapoli said Huntington Bay also was “susceptible" to fiscal stress, because of a change in the village’s fund balance, which is the balance of funds available after income and expenses. Huntington Bay was the only village on Long Island to make DiNapoli's list.
The March report prompted some village residents to question Mayor Herb Morrow's credit card spending, leading to an investigation by the Suffolk County District Attorney's office. Morrow gave up the card this summer.
The district attorney's office has declined to comment.