NEWBURGH – Despite local accolades for the City of Newburgh’s proposed 2024 city budget, State Comptroller Thomas DiNapoli’s office reviewed the spending plan, pointing out a number of deficiencies.
The review said the city’s use of some $3.4 million of fund balance to close gaps in the budget decreases the fund balance that is available to cover unforeseen circumstances.
The city has appropriated approximately $2.5 million of sewer fund balance and appropriated $24,770 of fund balance for the water fund. However, the state noted the water fund already has a deficit fund balance of $58,722 and therefore, no water fund balance is available to appropriate.
It also said the city could potentially face shortfalls based on revenue estimates for sewer usage and sale of metered water.
The comptroller said the Newburgh budget includes a reduction of $2 million in the general fund and $201,683 in the water fund for a “vacancy factor,” a budgeting technique used by the city to account for open personnel positions. The review said the use of a “vacancy factor” may not be prudent, as it leaves personnel services appropriations with insufficient amounts to cover expenditures.
As a result, the appropriation for personnel services is likely underestimated by as much as $2 million.
Other criticisms of the proposed 2024 budget include that overtime funding for police at $1.1 million is likely underestimated by a total of at least $715,000.
- The proposed budget does not include a contingency appropriation in the general fund.
- The proposed budget does not include a tax overlay, which could potentially create a revenue shortfall in 2024.
- During the state’s review of the city’s proposed 2024 budget, two conflicting proposed budget documents were posted to the city’s website. Although variances between the budgets were found to be immaterial, presenting two different proposed budget documents is concerning from a transparency perspective as members of the public rely on the proposed budget to make informed decisions.
- The proposed budget includes a tax levy of $23.54 million, which is $1.12 million from exceeding the tax levy limit.
Key recommendations from the comptroller’s office include:
- Develop a plan to maintain fund balance at a reasonable level to ensure funds are available in case of unanticipated expenditures or a shortfall in revenues during the fiscal year.
- Review the amount of fund balance appropriated for the water fund and amend to the amount that is available. Review the estimate for sewer usage revenue and amend as necessary.
- Review the estimates for New York State Touring Route Program revenue and expenditures and amend as necessary.
- Lower the estimate for the sale of metered water or pass a resolution to raise water rates prior to the adoption of the budget.
- Review the estimate for police overtime and increase it to an appropriate level or implement changes in procedures to manage costs within budgeted amounts.
- Consider including a reasonable estimate for contingencies in the budget.
- Review the estimate for personnel services and amend as necessary.
- Consider establishing a reasonable estimate for a tax overlay in the budget.
- Ensure the budget presented to the public and posted to the city’s website are consistent.
- Adopt a budget that includes a tax levy no greater than the tax levy limit (tax cap) unless a local law is adopted to override the limit.
