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Purpose of Budget Review

The purpose of our budget review was to identify issues which impact the City of Yonkers’ financial condition in the current and future years.

Background

The Office of the State Comptroller, as Fiscal Agent for the City of Yonkers (City), determined that the City’s adopted budget for fiscal year 2025-26 and the related justification documents are in material compliance with the requirements of the Fiscal Agent Act (Chapter 488 of the Laws of 1976). The City’s 2025-26 adopted budget totals $1.55 billion, which includes operating and debt service funding of $809.2 million for the Yonkers Public Schools (District) and $739.8 million for the City. The 2025-26 budget is $35.8 million more than the City’s budget for 2024-25, an increase of 2.4 percent.

Key Findings

• The 2025-26 budget relies on nonrecurring funding of $114.4 million, such as appropriated fund balance, one-time State and Federal funding and sale of property, to balance its budget.
• The City plans to borrow up to $15 million for tax certiorari settlements in the 2025-26 fiscal year. Tax certiorari is the legal process by which a property owner can challenge the real property tax assessment on a given property to reduce its assessment.
• Overtime costs could potentially be underestimated for police by as much as $341,000.
• Employee retirement costs are likely underestimated by as much as $5.3 million.
• The City should be mindful to ensure appropriations are sufficient for any potential liabilities when contract agreements for collective bargaining agreements are reached.
• The City’s contingency reserve is 1.5 percent of the City’s general fund budgeted appropriations, leaving limited flexibility to cover any other unforeseen or unexpected costs. Since 2017, the City’s debt service payments have risen 6.2 percent. The City will need $90.4 million to service its debt obligations during 2025-26.

Key Recommendations

1. Replace nonrecurring revenue, such as fund balance, in the 2026-27 budget.
2. Pay tax certiorari claims from annual appropriations instead of using debt.
3. Review the estimates for police overtime, employee retirement and contractual appropriations and adjust them to an appropriate level as necessary.
4. Consider establishing a contingency appropriation at a level that will provide the City with adequate funding for any significant unforeseen costs.