Comptroller’s Warning – Glen Cove Budget

Written by Matthew A. Piacentini Wednesday, 19 October 2011 14:42

A letter from Deputy Comptroller Steven Hancox in the New York State comptroller’s office was released on Tuesday, Oct. 18, reviewing the City of Glen Cove’s budget for 2012 and warning around $2 million to $2.5 million in possible budget shortfalls.

Because of the City of Glen Cove’s budgetary deficit in the year 2006, the letter explained, Glen Cove was authorized to borrow $12.8 million in 2007, and as part of the arrangement, has to submit a proposed budget to the comptroller each September. This year’s budget was submitted as required and the deputy comptroller stated that the city council must either adjust the proposed budget based on the review from the comptroller, or the city council must send a letter explaining why it will not adjust the budget based on the recommendations.

The deputy comptroller summarized the city budget as totaling $46,561,851, with $17,780,978 in estimated revenue and $28,780,873 in real property taxes.

Positive Steps

The deputy comptroller began the review letter stating that the city has taken positive steps to address long-term budget issues, such as: transferring the sewer system to Nassau County and creating a new system that monitors the expenditures of city officials. The deputy comptroller also said that the city council’s budget kept the levy well below the new tax cap.

Hard Times All Around

The deputy comptroller acknowledged the “economic recession that has affected all governments,” stating that the city collects about $900,000 less in mortgage tax revenues than it did in 2007.

Review and Recommendation 

The deputy comptroller said that “the city’s efforts have not yet corrected the city’s long-term structural budgetary problems. We are still concerned that the city’s general fund deficit grew in 2010 and 2011 and will likely exceed $5 million by the end of this year.”

The city was told that borrowing an estimated $1.8 million to pay for police retirements and borrowing most of the cost of paying tax certs or refunds for property tax grievances was not a good idea.

The deputy comptroller gave some items of advice, saying, “We believe that prompt action by city officials will help improve the city’s financial condition.” These are as follows:

• Deficit – the city has a deficit that will increase to $5 million at the end of this year. “We are concerned that the 2012 budget lacks provisions for decreasing the general fund deficit,” said the deputy comptroller.

• Borrowing for retirements – as mentioned, six police officers plan to retire in 2012 and this requires $1.8 million, which the city plans to borrow. This would have to be allowed by the state, and the deputy comptroller said that if this is not approved by the New York State Legislature, “the city will experience a budget shortfall in 2012 of $1.8 million.”

• Borrowing for Tax certs – the 2012 budget allows $100,000 for paying tax certs, but the average cost is $660,000 a year so the rest will be borrowed. “The city council should consider whether they could further reduce the city’s reliance on debt to pay tax certiorari claims in 2012,” said the deputy comptroller.

He added that this year the council did not take the same advice and will bond $610,000 this month to pay 2011 refunds.

• Inconsistent revenue estimates – the deputy comptroller criticized an estimate of $400,000 in revenues from building department fees, saying, “Although city officials are optimistic about construction of new developments, they presented no documentation to show how they arrived at the $400,000 amount, or whether it is realistic…”

He added that for this year’s budget, the comptroller questioned an estimated revenue of $300,000 but “the city council imprudently increased this revenue estimate to $320,000… the city may experience a revenue shortfall of $70,000 because… only $250,000” is now projected for 2011.   

• Water fund deficit – the city has a deficit of $790,000 as of last year and the deputy comptroller suggested the city “permit the water fund to generate a fair return from its operations.”

• Golf deficit – the comptroller’s office believes that Glen Cove’s golf and recreation fund will end the year with a $100,000 deficit for 2011, creating a total deficit in the fund of $632,000, stating, “The city council should [develop] a self sufficient golf operation… officials did not address this deficit [this year] and have not yet developed a financial plan…”