Disagreement over bonds leaves city on Long Island facing a cash crunch

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Long Beach, N.Y. is facing a fiscal crisis after a $2.1 million bond measure to fund employee-leave obligation payments failed in the city council last week.

Long Beach City Manager Michael Tagney said after the borrowing proposal was defeated at an April 18 meeting that layoffs and a shutdown of some municipal services may follow.

New York State Assemblyman Melissa Miller, R-Atlantic Beach, and Nassau County Legislator Denise Ford, R-Long Beach, both issued letters last Thursday to State Comptroller Thomas DiNapoli requesting a review of city finances in light of its predicament.

“The City of Long Beach is currently experiencing an unprecedented fiscal crisis that threatens to decimate City services including reductions in bus routes and potential layoffs,” said Ford in her letter to DiNapoli. “I am concerned that perhaps your office has been habitually misled as to the true financial condition of the City of Long Beach and that the City’s hardworking residents may pay the price through increased taxes and decreased services.”

Ford pinned the blame for Long Beach’s financial woes on former City Manager Jack Schnirman, who was elected Nassau County Comptroller last November. Schnirman said in a statement that worker separation payments for unused vacation and sick days were applied “evenly” and attributed the city’s current troubles to failure by two city council members to approve the necessary borrowing. Bonding measures in Long Beach require the approval of four of the five city council members.

“Long Beach finds itself in the middle of an unnecessarily manufactured cash crisis because two council members failed to approve a routine bond request that was clearly accounted for in the unanimously approved 2017-2018 budget and was decreasing as planned,” said Schnirman. “The earned leave obligation policy was applied evenly across the board for a number of years with the advice of then-corporation counsel.”

DiNapoli’s deputy press secretary, Brian Butry, declined comment on Long Beach’s fiscal condition because the office is in middle of its annual budget review. DiNapoli said in an audit of Long Beach’s budget released last May that its “significant” revenue and expenditure projections were “reasonable.” He noted that appropriations for overtime salaries totaling $2.7 million may not be sufficient.

Moody’s Investors Service assigned Long Beach a Baa1 issuer rating with a stable outlook in February citing expectations for “healthy” liquidity and reserves that will be challenged due to structurally imbalanced budgets. Long Beach was downgraded five notches by Moody’s in 2011 when the city was on the verge of bankruptcy. Moody’s gave Long Beach two one-notch upgrades in 2015 and 2016 following the issuance of deficit reduction bonds in the 2014 fiscal year.

The Long Beach press office did not respond to a request for comment. The city released a $95 million budget proposal for the 2019 fiscal year that would include a 12% tax increase. The new fiscal year begins on Oct. 1.

Long Beach has a year-long population of 33,407, but the number is much larger during the summer months, according to Moody’s. The city, about 35 miles outside Manhattan, was hit hard by Hurricane Sandy in 2012 forcing a major infrastructure rebuild.

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