The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the City’s proposed budget for the 2023-24 fiscal year are reasonable.
The City of Yonkers is authorized to issue debt not to exceed $45 million to liquidate current deficits in the City School District’s general fund as of June 30, 2014. Chapter 55 of the Laws of 2014 requires the City to submit its proposed budgets for the next fiscal year to the State Comptroller and the Commissioner of Education for review while the deficit obligations are outstanding.
Certain significant revenue and expenditure projections in the proposed budget are unreasonable. Furthermore, officials’ continued practice of using debt to pay for recurring costs is imprudent. Our review found the City’s proposed budget:
- Continues to rely on $112.3 million in nonrecurring revenue, such as appropriated fund balance, one-time State funding, and sale of property, to finance its operations.
- Includes revenue estimates for income tax surcharge, sales and use tax as well as City and State mortgage tax that may not be achievable.
- Results in additional debt and interest costs because the cost of tax certiorari claims are bonded instead of being financed through the operating budget.
- Includes $8.5 million for contractual settlements. Five of the City’s eight union collective bargaining agreements (CBAs) have expired or will expire soon. The City could face additional expenditures when these contracts are settled.
- Includes a $5.5 million general fund contingency reserve; this amount is less than one percent of the City’s general fund budgeted appropriations. This amount may exhaust the current amount budgeted, leaving a limited flexibility to cover any other unforeseen or unexpected costs.
- Includes $99.7 million to service its debt obligations during 2023-24. This amount represents about 7.1 percent of the City’s annual budget.
- Includes a tax levy of $414,697,043.
The City’s proposed budget also includes the Yonkers Public School District’s (District’s) budget. Our review found the District’s proposed budget:
- Is structurally unbalanced with a budget gap of at least $33 million.
- Overestimates State funding for basic aid by approximately $1.2 million.
- Relies on $12 million of additional State aid for services and expenses, which may not be available in future years.
- Does not include a specific appropriation for contractual settlements. Three of the District’s CBAs expired June 30, 2021 and one of the District’s CBAs expires June 30, 2022. The District could face additional expenditures when these contracts are settled.
- Likely underestimates charter school tuition payments by approximately $$687,000 and the workers’ compensation appropriation by approximately $300,000.
- Includes $5.3 million for contingency; this amount is less than one percent of the District’s budgeted appropriations. This amount may exhaust the current amount budgeted, leaving a limited flexibility to cover any other unforeseen or unexpected costs.
- Develop a plan to maintain fund balance at a reasonable level and discontinue the practice of relying on one-time revenues to finance recurring expenditures.
- Review the estimates for income tax surcharge, sales and use tax as well as city and State mortgage tax and amend as necessary.
- Consider adjusting the appropriation for tax certiorari payments and provide a financing source for tax certiorari settlements.
- Review the estimate for the City’s contractual settlements, and the potential need for the District’s contractual settlements and amend as necessary.
- Review the outstanding debt and review alternatives to borrowing.
- Eliminate the $33 million gap in the District’s budget request.
- Review the estimate for charter school payments and workers’ compensation appropriation. and amend as necessary.
- Review the estimates for the contingency appropriations and amend as necessary.