The finances of Long Beach have been difficult for years, but suddenly, they’re on the edge of disaster, and the same is true of the city’s toxic political environment.
In 2012, the financial situation was so bad that the state authorized the city to borrow up to $12 million to manage deficits. Although challenging, its finances generally stabilized. But now they are in crisis because $2.1 million in bonding to fund separation payouts for employees failed to get the supermajority vote needed from the city council on April 17.
That borrowing was called for in the 2017-18 budget the council passed. Now the dysfunction is hurting the city’s credibility.
Last week, Moody’s Investors Service announced a negative credit outlook for Long Beach. Moody’s said the downgrade “reflects the liquidity challenges the city will have in the near-term following years of operating deficits and City Council’s failure to approve budgeted borrowing to pay for operating expenses.”
Derailing a budget midyear is bad management. It’s also true that separation packages, which are an operating expense, shouldn’t be bonded.
And the spending on separation pay that caused the cash crunch, including $108,000 for Jack Schnirman, the former city manager and current Nassau County comptroller, has itself attracted accusations of impropriety.
According to the city code, payouts are limited to 30 percent of unused sick days and 50 unused vacation days, which would have made Schnirman’s payout $55,000. The city and Schnirman say the calculations were done in conformance with a decades-long interpretation of city code. However, the city has yet to produce any legal opinion to justify the larger payouts.
In a city that’s consistently had trouble paying the bills, taxpayers are entitled to an explanation for why such a generous interpretation was applied. The practice needs to be stopped if it’s unlawful, and money might need to be clawed back.
Even as it struggles with the current budget, Long Beach is considering a 2018-19 spending plan with a potential 12 percent tax increase. It’s unlikely the city council would approve that, and Acting City Manager Michael Tangney hopes to find savings to avoid a huge hike. It would be ideal if savings could be found by getting away from massive retirement payouts like the ones that caused this crisis, including the $312,883 Tangney took when he retired as a police lieutenant. He has since earned $228,000 a year as police commissioner.
The primary problem is the cost of a small city providing its own police, a paid fire department and other expensive services. But in Long Beach, the proven way to get voters behind a tax increase is by threatening to curtail any of these services.
Since 2012, the state comptroller has reviewed Long Beach’s troubled finances annually. This year, that look will include these payouts.
But the bigger problem is defining what services taxpayers want and will pay for, making them affordable, and moving past the politics of rivalry to a constructive consensus.