Long Beach Hires Firms To Help Fix Financial Woes

LONG BEACH, NY — The City of Long Beach has hired two financial consulting firms to help pull itself out of the continuing financial crisis it is facing.

The city has been facing mounting financial hardships for years, and has been operating with a deficit for a long time. Just recently, a judge ruled the city owed $131 million for a case dating back to 1989, which only compounds problems.

“Simply put, Long Beach is operating an annual budget that carries extreme negative/positive swings in operating fund balances, with holes often plugged by borrowing money, and this is unsustainable,” said City Manager Donna Gayden in a statement. “But even worse we face total prospective financial obligations that likely exceed $460 million, an enormous amount. We cannot go on with the status quo. The appointment of these firms will begin the process of confronting the city’s challenges.”

To help, the city announced that it has hired M3 Partners, a financial turnaround firm, and O’Melveny & Myers, a law firm with experience representing distressed corporations and municipalities. They have both worked with clients that are both smaller and larger than Long Beach.

The cost for the first phase of work of the firms is $750,000, which the city does not currently have. To pay for the work, the city said it is working with State Sen. Todd Kaminsky to get funds from the state's Financial Restructuring Board, which is designed to provide grants to fiscally stressed municipalities.

Teams from the two companies have begun combing through the city's financial records, officials said, looking at policies, contracts, obligations, legal commitments and other relationships. The results of this first analysis will be presented to the City Council and the public in June.

If the city authorizes a second phase of work, the companies will start to implement recommended strategies. The city said that phase two work has not yet been approved, and is contingent on the first phase and continued outside funding.

“We are committed to reasonably preserving the programs and services supported by the annual operating budget,” Gayden said. “We still have a city to operate and we will work hard to preserve the breadth and quality of the services and programs that Long Beach needs and residents want. Broadly speaking, the history of policies and practices in Long Beach have been lax and extremely costly to the point of serious financial distress. This must be rectified.”