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Long Beach must stem red ink to avoid state fiscal takeover

Long Beach City manager Jack Schnirman in a

Long Beach City manager Jack Schnirman in a file photo. Credit: Handout

The problems of Long Beach are a microcosm of those that have plagued governments across Long Island and elsewhere in the state: a politically popular willingness to cut taxes or keep them level, without the needed reductions in spending. Any government that pursues that course will eventually find itself in trouble.

In the case of Long Beach, the precipitous fiscal free fall that the city endured in December may turn out to have been a yawn, compared to the more terrifying descent that lies ahead, if the city council fails to adopt the tough new proposed budget by May 31 and implement it.

In one dizzying December move, Moody's Investors Service downgraded the city's bond rating five steps, from A1 to Baa3. And the rating agency is watching carefully. If a further downgrade happens, the city's rating would be at the level of junk bonds, which would make it extremely difficult to borrow to meet payroll. It could also lead to the imposition of a state control board, stripping The City by the Sea of its autonomy. That's an outcome to be shunned.

To avoid it, the city needs to obey the iron laws of budget-making: Align revenues with expenditures and live within its means. That hasn't been going on. Now it's time for Long Beach to dig itself out.

The malpractice is bipartisan. For decades, Democrats ruled. In recent years, control of the city council has alternated between the parties. The Republicans were in charge last year. The Democrats are now. They hired a new city manager, Jack Schnirman, whose job has been to deliver the bad news. On Tuesday evening, at a raucous public budget hearing, he laid out the stark choices facing the city.

In digging into the recent past, Schnirman found some paradoxical trends: The number of employees has gone up, though the population has gone down, and the level of services has remained the same. Also, as the number of full-time employees went up, so did overtime -- the opposite of the normal equation. A lot of the hiring happened in 2011. Critics of the budget blame that hiring on tropical storm costs; Schnirman points out that it was an election year.

For starters, Schnirman has required that he approve in advance both overtime and spending. The most painful step so far is the layoff of 67 employees. Between those savings and other steps, such as management employees' contributions to their health care, the city has saved about $3 million. It needs to save $4 million more, through union concessions such as lag payrolls, worker contributions to health care, and no raises.

The nearly $88-million budget includes a 4.1 percent general fund property tax increase. The plan also includes three years of a property tax surcharge to pay off the $10-million inherited deficit. But the State Legislature could provide a solution costing less than half what the surcharge would. The bill would authorize the city to sell bonds and stretch out the payments over 10 years. In return, Long Beach would accept closer state scrutiny, including an annual review of its budget by Comptroller Thomas DiNapoli. That arrangement makes sense.

The alternatives to belt-tightening are scary: a control board and a tax increase of as much as 41 percent. This budget is no day at the beach, but backing away from it would be a step into quicksand.


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