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Sinking City: Long Beach Faces Deep Financial Troubles

Built in 1964, The City Hall in Long Beach is overdue for some renovation and repairs but that will have to wait until the debt crisis is fixed first. (Jon Sasala/Long Island Press)


Some Long Beach officials who didn’t want to go on the record told the Press that they wish DiNapoli’s office hadn’t waited so long to act, asserting that the previous administration was raiding the rainy day fund for years and alluding to all kinds of financial skullduggery bordering on criminality.

“Budget issues are not felonious,” says Hancox, citing shrinking sales taxes and mortgage recording taxes caused by the recession as the chief culprits of a crisis like Long Beach’s.


“We’re going to pursue this as rapidly as we can,” he says, adding that the comptroller’s office won’t wait until the final report is done months from now if they can help the city take appropriate action before then.

DiNapoli’s office will be picking up after the independent audit conducted by O’Connor Davies Munns & Dobbins, a firm based in Westchester, which was requested by the new administration when it came into power. The auditors examined revenues projected from investment earnings, commercial sanitation fees, utility tax and state aide mortgage tax in 2010-2011. They were budgeted for $5,770,000, but the actual revenues were $2,265,428, a deficit of $3,504,518 or a 60.7 percent difference.

Audited expenses, such as recreation, fire department, police department and debt service principal, were budgeted to be $20,287,681 but actually cost the city $23,217,744, a difference of $2,930,063 or 14.4 percent. According to the auditors, the change in the 2010-2011 audited fund balance was a negative $4,900,727.

No one can dispute that the city’s so-called rainy day fund all but dried up. The independent auditors said the balance in the city’s general fund was $7,452.711 in 2008, $4,506,235 in 2009, $1,375,178 in 2010, and $107,217 in 2011. Some Democrats on the council say what happened to the rainy day fund was a scandal. But to Hennessy, the former city council president, ending the fiscal year with a surplus of a hundred grand is a cause for celebration, especially given the recession hammering municipalities across the land.

“Only in Long Beach is ending the year with a surplus a criminal act,” says Hennessy. He says the previous city council used the surplus to keep the property taxes level despite pressures from the growing recession. “We should be proud of what we did,” Hennessy says. “We didn’t turn to the taxpayer in these difficult times. We put this devastation off for a couple of years. Now it’s time to pay the piper.”

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