The New York State Comptroller’s office has officially certified the total deficit for the City of Amsterdam to be $8.6 million as of June 30, 2018, according to a letter received by the city on Thursday and released by the mayor’s office today. The certification is necessary for the city to proceed with deficit borrowing for the purpose of eliminating the entire deficit.
According to the letter, which was signed by Deputy Comptroller Elliot Auerbach, the city is now authorized to issue bonds for up to $8.3 million. In a statement released along with the letter, Mayor Michael Cinquanti wrote that before the city borrows, he will consult with the comptroller’s office, the city’s financial advisors, and the New York Conference of Mayors on the best strategy to pursue.
In January 2019, Jeffery Smith, president of Municipal Solutions, the city’s long-time financial advisory firm, suggested the city use a series of short-term bond anticipation notices (BAN’s) instead of using a single ten-year bond to finance the deficit. He also suggested that the city might not have to borrow the full amount of the certified deficit.
During his state of the city speech last month, Cinquanti also mentioned that the city may not need to borrow the full amount, but estimated the cost to service the borrowing may range between $1 million to $1.5 million per year for up to ten years. He set a “60-40” goal of meeting 60% of the cost by cutting expenses, and 40% of the cost by raising new revenues.
According to the city’s last annual update document for the 2018-2019 fiscal year, the overall total of funds with deficits improved by approximately $1 million. However, the fiscal year has not been audited by the city’s independent auditing firm yet.
To address the cause of the deficits, which the state’s letter identifies as being due to “several years of poor budgeting practices”, Cinquanti wrote, “I have spent significant time during my first month in office reviewing our city’s budgeting practices and I am working with the city controller to make changes to the worksheets I use to develop the budget. I have also met with representatives from the comptroller’s office to discuss the changes they will be looking for moving forward. They are requiring that we provide budget training for our common council members and make changes to our city’s budget format and financial performance reporting formats and frequency.”
The deficits of the individual funds as of June 30, 2018, according to the comptroller’s office, based on review of the city’s audit reports are
- General fund $6,090,921
- Transportation fund $1,321,091
- Sewer fund $512,675
- Golf course fund $763,844
