NY Comptroller Examines Long Beach Finances, Employee Payouts

New York Deputy Comptroller Gabriel Deyo issued a letter on Wednesday that questioned many of the City of Long Beach's financial and budgetary practices, including how it handled its payouts to former employees, which is plunging the city into a budget crisis.

Last month, when the city's $2.1 million bond proposal was initially rejected by City Board members, many people, including local politicians, asked State Comptroller Tom DiNapoli's office to audit the city. Though the comptroller didn't perform an official audit, it did review the city's budgeting practices.

The report focused on how much the city charges for garbage pickup, its cash flow projections and, most importantly, its payouts to former employees. Because of the results of the report, DiNapoli announced his office will be conducting a full audit of the city.

Residents have lambasted the city in recent weeks after it was revealed the city was paying $2.1 million in separation pay to employees, many of whom were still working for the city. Chief among them was former City Manager Jack Schnirman, who was given a payout of $108,000 when he left to become the Nassau County comptroller. But critics say that he was only entitled to around $55,000.

The comptroller's office examined these payments as part of its review. However, the report specifically says it did not evaluated the appropriateness of the practice as part of its review.

"Officials told us that payments to employees for accrued leave are based on past practice and interpretations of the city's Code of Ordinances, at the City Manager's discretion," Deyo wrote.

While the report did not comment on the practice itself, it did criticize the city for borrowing money to fund the payouts. Over the last two years, the report says, the city borrowed millions of dollars for payouts. It was a practice that was continued this year, until two council members voted against it.

"The city's continued practice of borrowing to fund these operating costs is not fiscally prudent," the report reads. "This practice will saddle future taxpayers with the repayment of past service costs, with interests, for which they received no benefit."

• Read the complete, six-page report by the comptroller's office here.

The amount of debt the city has continues to grow, the report says. For the last fiscal year, which ended on June 30, 2017, the city was putting 12 percent of its budget to repaying debt. Personal services and employee benefits totaled 75 percent. That left just 13 percent of the budget for everything else the city has to fund.

"With these costs account for 87 percent of revenue, there is limited ability to finance operations and maintain infrastructure," Deyo wrote in the report. "Given the uncertainty of current year operations, it is difficult to project how the city's finances will be at year end."

Deyo added that city officials said they had plans to cover the city's operating costs for the rest of the year, but did not give those plans to the comptroller's office.

The report did not paint a rosy picture for the city's financial future.

"...City officials continue to take actions that are detrimental to the city's financial position," the report reads. "It is imperative that officials address the city's declining financial conditions during this budget cycle. While the proposed budget has balanced revenues and appropriations, it does not include measure to improve financial condition."

Photo: Patch