City of Poughkeepsie Drills Down on Remaining $7.1 Million General Fund Deficit
City of Poughkeepsie officials announced today that, despite budgetary pressures caused by the Coronavirus pandemic, efforts to reduce the city’s general fund deficit will continue throughout 2021.
“There is funding designated in our budget next year for further work with our independent accounting consultant, RBT CPAs, LLP, which has been working with the City as the deficit has been reduced from its high-water mark of $13.2 million, to its current level of $7.l million,” said Mayor Rob Rolison.
The City adopted a comprehensive Debt Management plan in 2017 and also has sharply curtailed borrowing for the last five years. Debt service costs, the payments made by the City each year on its outstanding bonds, dropped by approximately $2.5 million in 2019 and are projected to drop by another $1 million annually, beginning in 2024.
“Declining debt service costs are taking pressure off the general fund, and careful budgeting every year has meant that the City has not added to the general fund’s deficit since Mayor Rolison took office in 2016,” said City Administrator Marc Nelson said.
The remaining $7.1 million general fund deficit is partly the result of inter-fund relationships among the City’s other funds: Water, sewer, capital projects and sanitation. In 2018, the City discontinued its transit operation and wound-down its transit fund. For years, the city’s transit fund had operated at a loss and had been subsidized by the general fund.
“Inter-fund transactions move assets between the City’s funds. These complex transactions, especially those that occurred years ago, need to be reviewed. Our continuing work with RBT CPAs, LLP will enable the City to research these old transactions and identify opportunities to reduce the remaining deficit,” said Finance Commissioner Dr. Brian Martinez.
“Over the past four years, the City made a concerted effort to address the General Fund deficit accumulation. Unwinding years of inter-fund transactions is not an easy task. We commend the administration for its efforts to fully understand the underlying causes and potential remedies for the City’s deficit,” RBT Partner Jennifer George said.
A copy of the city’s adopted debt management plan can be found here.