[read complete report – pdf]

Purpose

The purpose of our budget review was to provide an independent evaluation of the City’s proposed budget for 2025-26.

Background

Chapter 531 of the Laws of 2019 authorizes the City to issue debt not to exceed $8.3 million to liquidate the cumulative deficits in the City’s general, transportation, sewer and recreation funds accumulated as of June 30, 2018. Additionally, Chapter 531 requires the City to submit to the State Comptroller, starting with the fiscal year during which it was authorized to issue the deficit obligations, and for each subsequent fiscal year during which the deficit obligations are outstanding, its proposed budget for the next succeeding fiscal year.

Key Findings

• The significant revenue and expenditure projections in the 2025-26 proposed budget are reasonable. However, we identified certain revenue and expenditure projections and other matters that should be reviewed by the Mayor and Council.
• City officials did not implement all the recommendations in our previous budget review letter when preparing the 2025-26 proposed budget.
• The Mayor submitted the 2025-26 proposed budget to the Council on May 6, 2025, or 35 days after the Charter-established deadline.
• The proposed budget for the recreation fund is not structurally balanced because it includes a subsidy from the general fund to finance its operation.
• The proposed budget for the water fund does not include appropriations for real property taxes that will be owed to local governments and school districts for properties that the City owns outside of the City for the purpose of supplying water to the City.
• The proposed budget allocates appropriations for personal services, contractual expenditures and employee benefits between the operating funds using unsupported allocation methods.
• The City’s proposed budget includes a tax levy of $6,378,809, which is within the legal limit.

Key Recommendations

1. Ensure future proposed budgets are submitted to the Council on or before the deadline.
2. Continue to evaluate and explore ways to make the recreation fund self-sufficient.
3. Review appropriations for real property taxes on City-owned property and make modifications to the water fund budget to include omitted appropriations.
4. Develop an allocation plan based on detailed analysis that ensures costs allocated to each fund are directly related to its operations.