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Sinking City: Long Beach Faces Deep Financial Troubles


BOTTOM OF THE OCEAN

To Councilman Michael Fagen, watching the new city manager slowly come to grips with Long Beach’s crisis has not been easy. A Democrat, he was in the minority with Councilman Len Torres on the council when Theofan was in as city manager, and Thomas Sofield, Jr., was council president (his father Thomas Sofield, Sr., was the Long Beach police commissioner). Fagen fought with the Republican majority to obtain crucial financial information because he was sure that the numbers weren’t adding up. Since then, he’s felt vindicated by Moody’s downgrade. But in February he was indicted on charges that he collected more than $14,000 in unemployment benefits while failing to report his city council job. He claims Theofan duped him and filed false papers without his knowledge.

Fagen’s lawyer, Marc Gann, tells the Press, “Certainly, everything I know makes it appear that this is a political witch hunt that was initiated by the Republicans in Long Beach at a time when they were in power… I think ultimately it was with the intention of getting him removed from the city council.”


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The pending case, which is still in the pre-trial phase, is certainly a distraction for Fagen. But he’s not the only one on the council whose name has been in the papers recently. John McLaughlin, a retired New York City firefighter and the sole Republican in the new government, was the subject of a blistering attack in the New York Post two years ago for collecting a tax-free disability pension despite being “an accomplished triathlete and marathon runner,” the Post wrote. Asked by the Press recently to comment on that accusation, McLaughlin said he didn’t want to talk about it.

In the Long Beach Herald McLaughlin has expressed his wish that everybody could work together on the new council. Meanwhile, on the Democratic side, Fagen says he has high hopes that Schnirman would come into office and stop the bleeding before the deficit got any worse but he’s been disappointed by his colleagues’ inaction.

“Every day that went by, this deficit continued to increase,” Fagen says.

Schnirman admits it’s been a steep learning curve, though he says he dealt with a “significant inherited problem in the Town of Brookhaven” and that he knows “what it takes to put a budget back on balanced footing…. It’s a major challenge when you come in and you’re faced with a crisis right away.”

On a recent conference call to reporters, Schnirman outlined the financial situation as he saw it. The city’s deficit is 12.4 percent of the budget, which he said was proportionately a bigger deficit projection than Suffolk County’s.

Charles Theofan, Previous Long Beach City Manager

In response, Theofan, says that “Irene caused a short-term financial problem that was remedied” by a tax anticipatory note in December and that the city “should recoup up to $2 million if full diligence is given” by the Federal Emergency Management Agency. “The City of Long Beach has one of the lowest bonded indebtedness to the size of the budget in all of Long Island.”

Current city council members scoffed.

“As has been the case in the past, Charles Theofan’s claims and his calculations are always suspect, and this is no different,” says Fagen. “After burning the City of Long Beach to the ground financially, I’m hard pressed to find any reason why the county executive would want to do the same thing to the other residents of Nassau County… You don’t get affirmed by Moody’s in August and fail to make payroll three months later. You just don’t. The extent of Irene only added up to a little more than a million dollars in claims. OK? Your hole was well over $6 million in December. You just can’t blame it on that. Regardless, even after Irene, they continued to give out promotions and hire.”

Steven Hancox, the state’s deputy comptroller, says they’ve been asked by Long Beach to come in and examine collections from the city’s seasonal activities first, but his office is well aware of the significant deficit problem facing the city.

“We don’t go into it with blinders. We’ll be looking at other issues,” he tells the Press. “Certainly a five-grade downgrade is a warning sign,” he says. “Sometimes you can see these fiscal challenges growing over time, and you can spot them ahead of time. And sometimes it is a very abrupt drop off of a cliff.”

By comparison, he says that Glen Cove has been under review since 2007 because they had to go to the state legislature and get special permission to borrow money to start paying off their deficit. Long Beach “is not there yet,” Hancox says.

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