Amsterdam officials are facing an even deeper financial hole because the city’s accumulated fund balance deficits have swelled to almost $8.27 million, according to an independent audit.
EFPR Group Partner Joseph Klimek discussed with Amsterdam Common Council members Tuesday the firm’s independent audits of the city’s financial statements and federal funds received and spent during the 2017-18 fiscal year. The audits represent a snapshot of the city’s finances as ofJune 30, 2018, so any action the city has taken after that date is not reflected. The independent audits are the final review to be completed for that fiscal year, which brings the city up to date with its finances.
All fund balance deficits increased from the prior fiscal year except for the miscellaneous special revenues fund balance deficit, which decreased by $5,748, according to EFPR Group. The overall deficit accumulated across five fund balances totaled $8,268,563 at the close of the 2017-18 fiscal year, which is an approximately $1.14 million increase from the prior fiscal year.
At the close of the 2015-16 fiscal year, EFPR Group had determined Amsterdam held an overall deficit across four fund balances totaling $5.16 million. At the end of the 2016-17 fiscal year, the city’s overall deficit increased to $7.12 million, according to the independent audit.
Klimek told Common Council members that the primary method to address accumulated deficits is increasing the property tax levy, budgeting revenue above expenses for a fiscal year.
“You’re gonna have to increase other revenues somewhere along the line in the city to make up the deficits,” Klimek said. “How do you do that? Really, you only got one source. You got property taxes that’s about it.”
Fund balance deficits as of June 30, 2018, totaled $5,974,761 for the general fund, $1,320,430 for the transportation fund, $763,373 for the golf course fund, $172,945 for the sewer fund and $37,054 for miscellaneous special revenues, according to EFPR Group. The golf fund is listed as “recreation” in financial reports but exclusively pertains to the course, according to city officials.
Finalized fund balance deficits for 2017-18 decreased nearly $110,000 from the preliminary amounts filed about five months ago with the state Comptroller’s Office for the fiscal year.
Fifth Ward Alderman James Martuscello, who serves as deputy mayor, said local officials are planning to raise taxes to maintain services and pay down accumulated deficits.
Common Council members later that evening approved holding a special meeting Tuesday, May 28, at 8:30 a.m. to introduce a local law to override the state-mandated imposed property tax levy limit for the city. The city council is also planning to finalize its amendments to the mayor’s proposed spending plan for 2019-20 that mourning.
On Tuesday evening, the Common Council also voted in support of the New York State Financial Restructuring Board performing a comprehensive review of the city’s finances. The state FRB will likely vote next month whether a review of Amsterdam’s finances will be conducted.
Amsterdam officials are also pursuing deficit financing authorization, which would allow the city to borrow funds to liquidate all fund balance deficits once Comptroller Thomas DiNapoli. Bonds to liquidate a deficit cannot exceed the certified amount.
Amsterdam needs approval from the state Legislature and governor to pursue deficit financing through making a Home Rule request per state Local Finance Law regulations. Sen. George Amedore and Assemblyman Angelo Santabarbara have reportedly committed to introducing a bill in their respective chambers.
Amsterdam would also be subject to several new reporting requirements until the deficit financing is paid off, per state Local Finance Law.
Some of these conditions include preparing quarterly reports for each budget summarizing trends of actual revenues and expenditures, submitting tentative annual budgets to the state comptroller to review and make recommendations, and notifying the state comptroller at least 15 days before issuing any bonds and notes or entering into an installment purchase contract.