Long Beach, N.Y., a coastal Long Island city that lost its boardwalk to Superstorm Sandy, is getting more federal help than previously estimated to rebuild.
The federal government will cover 90%, or about $180 million, of Long Beach’s storm-related expenses, city manager Jack Schnirman told the city council Tuesday night. The Federal Emergency Management Agency increased the coverage from 75% because of the size of Long Beach’s expenses, according to Schnirman, who said he got the news from U.S. Senator Charles Schumer, D, N.Y, in the past week. The city now expects to have to pay 5% to 10% of the costs, or $10 to $20 million, depending on how much the state kicks in, Schnirman said.
Sandy was the sixth costliest hurricane in U.S. history, when inflation and changes to population and property values are taken into account, with $71 billion in damage, according to the National Hurricane Center. The storm destroyed Long Beach’s boardwalk and other city government property, and damaged homes in the city, cutting the city’s property tax and recreational revenue.
Schnirman, who told the council Tuesday that ground had beeen broken to replace the boardwalk, said he was unsure when the financing for Sandy expense would be settled. Moody’s Investors Service said in November that the city could finance the costs with long-term debt without materially increasing its debt burden. The city has $40 million in debt outstanding.
On Tuesday night Schnirman proposed a 1.4% decrease in the city’s operating budget for fiscal 2013-14 to $83,944,654. His plan calls for a 2.19% increase in the property tax levy to help make up for revenue lost because of the storm. The average homeowner would pay an additional $64 a year.
Moody’s downgraded Long Beach’s general obligation debt to Baa3 from A1 in December 2011. When the current city council was seated at the start of 2012 it declared a fiscal emergency. Since then Moody’s has taken the city off review for a downgrade.
The administration in the Long Island community of 33,000 took various steps to cut spending and expand revenues, and the city council last year passed a balanced budget for fiscal 2012-13 -- the first in several years.
To pay back the borrowing that was done to cover recent years’ operating deficits, the city has instituted a three year surcharge for Long Beach property owners. Fiscal 2014 is expected to be the third and final year of this surcharge.
Schnirman is proposing that the city use 7.6% of the general fund’s $65.4 million for inter-fund transfer for debt service. The city is trying to start on a path to less annual debt service charges over time. In the current fiscal year it issued $3.6 million in debt while retiring $4 million in capital-related debt.
The Long Beach City Council will have a chance to alter the proposed budget before they vote on it. Schnirman will present his proposed capital budget to the council on May 21. The capital budget will be financed through the sale of bonds, Schnirman said.
The council is expected to vote by May 31. The city’s fiscal year starts on July 1.
