The state put the city’s level of fiscal stress back in the moderate category earlier this year, the second-highest level under Comptroller Tom DiNapoli’s Fiscal Stress Monitoring System.
The designation was based on financial information provided by the city for the 2016 fiscal year. The latest round of fiscal stress scores was issued on Sept. 27, and the list of municipalities in moderate fiscal stress includes Long Beach, Nassau and Suffolk counties, and Glen Cove.
The state said that the monitoring system uses financial indicators, including year-end fund balances, short-term borrowing and patterns of operating deficits, and creates an overall fiscal stress score for a municipality: “significant fiscal stress,” “moderate fiscal stress,” “susceptible to fiscal stress” or “no designation.”
Last year, Long Beach had improved its score and was moved out of the fiscal stress designation based on the 2015 fiscal year — Long Beach had previously been in the moderate category for 2014. However, city officials last year emphasized that despite the improvement, they still considered the city to be in a “moderate” level of stress.
Officials said that in 2015, the city was bolstered by an influx of federal funding to help rebuild after Hurricane Sandy, but emphasized that the infusion was not sustainable and stressed the importance of its long-term recovery plan.
In the spring, the state said that Long Beach’s stress level had increased from 33.8 percent for fiscal 2015 to 58.3 percent in 2016, putting it back in the moderate category.
“That reprieve in 2015 of no designation was really the infusion of Sandy recovery money, and we always took a conservative look and said we remain in moderate fiscal stress,” said City Manager Jack Schnirman, a Democrat running for county comptroller who was endorsed by DiNapoli. “We have been able to accelerate our progress by merging our fiscal and physical recoveries, and yet as a city that had a tremendous financial shock in 2011 going into 2012, we’re only half-way through implementing our ongoing recovery plan.”
Since 2012, when the city was on the verge of bankruptcy and had a $14.7 million deficit left over from the previous Republican administration, Schnirman said, the Democrats have taken steps to improve its finances, and there is now $9.4 million in the city’s reserve fund.
In a report of municipalities in stress for fiscal 2014, Long Beach had a score of 57.5 percent, which officials said marked a three-year improvement since the city was in dire financial straits and had a fiscal stress score of 95 percent.
“Six years ago, we inherited a large deficit and, at that time, perhaps the worst fiscal stress score in New York state,” Schnirman said. “The fiscal stress test is a terrific innovation, and it serves as an effective early- warning system that could have been helpful in alerting Long Beach to the previous administration’s financial crisis. In the years since, we’ve made a tremendous amount of progress in improving our fiscal stress score, one of the indicators of our ongoing financial recovery.”
Brian Butry, a spokesman for DiNapoli’s office, said that the city’s most recent score illustrated the challenges it continues to face.
“Most of the municipalities that deal with all three levels of fiscal stress have an issue with fund balance — either too low or completely exhausted,” he said. “In the case of Long Beach, it was not only their fund balance being low, it was that they had operating deficits in the past two years and were issuing short-term debt in each of the past two years. Knowing that the federal funding may run out, finding revenue sources for your budget are going to be important for places like Long Beach.”
Republican Steve Labriola, a former state assemblyman and a chief compliance officer in Nassau’s Office of Management and Budget running against Schnirman for comptroller, said that the moderate category showed that the city’s finances are in trouble and criticized his opponent’s record.
“Mr. Schnirman, the self-proclaimed ‘turn-around artist,’ has proven to be a con artist when he spins a tale of smart recovery but the numbers tell a different story,” Labriola said in a statement. “Mr. DiNapoli should reconsider his endorsement now that his auditors have unmasked Schnirman’s broken record.”
A spokeswoman for Schnirman, Kim Devlin, said that Labriola is the “poster child for corruption in Nassau.”
“He is responsible for indicted Ed Mangano’s corrupt contracts, and his own brother got a $10 million contract from the county,” Devlin said in a statement. “It’s no surprise he has trouble understanding the progress Long Beach has made over the past six years and has to resort to political attacks.”
The City Council passed what it called the city’s sixth consecutive balanced budget in May that stayed within the state tax cap, which they attributed in part to improved financial controls that led to credit rating upgrades from Moody’s Investors Service.
The state is expected to issue another round of fiscal stress scores in the spring.
“We expect to be in the lower end of moderate going forward,” Schnirman said.
Editor’s note: Labriola did not become Nassau County's chief compliance officer until March 2015, two-and-a-half years after the contracts cited in the indictment against Mangano.