An independent audit of Jersey City’s finances claims the city has overspent on health benefits, departments lack adequate internal controls for tracking revenue and spending, and the city doesn’t have a complete inventory of all the land, vehicles and equipment that it owns.

The city’s annual audit, which is required by state law, was released Friday. It examines Jersey City’s finances for 2025, the final year of former Mayor Steve Fulop’s 12-year tenure. The audit comes as city leaders grapple with a $255 million budget deficit that Mayor James Solomon and other officials describe as the Fulop administration’s overreliance on one-time revenue sources and accounting gimmicks.

City leaders are currently considering a new budget that will raise local property taxes at least 15% while making sweeping cuts to city services. The state government recently approved a $120 million aid package for Jersey City that includes strict oversight and conditions on how local finances are handled.

Parts of the audit support the current Solomon administration’s criticisms of Fulop. It cites a $22.5 million bond to help cover the cost of health benefits for city workers, noting that this practice shifts more burden onto taxpayers who don’t receive the benefits. Audits dating back to 2021 have found the city is spending too much on health benefits.

The audit also states that the Fulop administration sold off $33 million worth of city property for a one-time cash infusion, and drained $27 million from the city’s surplus. Solomon has criticized Fulop for such moves as examples of unsustainable practices that created the current budget crisis.

Auditors warn that at least one move to use capital funds to cover the operating costs of the Via Jersey City microtransit service may have broken federal rules, and the city might have to pay that money back to the capital fund.

The audit comes just days after Gov. Mikie Sherrill, speaking at an unrelated event, called Fulop “a very bad mayor” who put the city “in a lot of debt.” She and Fulop both ran in a crowded primary for the governor’s seat last year.

Earlier this year, the City Council unanimously passed a resolution urging the state comptroller to investigate the Fulop administration's financial practices.

Fulop, who now heads the Partnership for New York City, a nonprofit business advocacy group, did not respond to requests for comment. But he’s previously dismissed the current administration’s criticism as Solomon “playing politics” and said if he was still mayor, the city would have already passed a new budget with no tax increase.

The audit, which was conducted by the firm Donohue, Gironda, Doria & Tomkins, LLC, makes two major recommendations: It calls for a complete inventory of city assets, and for stronger internal controls to monitor spending and revenue collection.

In one example, the audit found that a program that allows off-duty police officers to perform third-party work had $7.7 million in uncollected bills. But because of issues with recordkeeping, auditors aren’t convinced the city will ever get that money.

“Balances have aged and portions may have been received and incorrectly posted to other accounts,” the audit reads. “As a result, this receivable is deemed fully uncollectible.”

The city’s lack of a complete asset inventory has been flagged in the annual audits since 2014; issues with internal controls have been noted since 2022.

State law requires that a corrective action plan be filed to lay out how the city will address the annual audit’s recommendations. Bill Viqueira, Jersey City’s finance director, said that plan will also be released Friday.

“Corrective action plans have been issued by the city previously,” Viqueira said. “The difference is we intend to actually do it.”

The annual audit differs from ongoing audits into rent control, health insurance claims and tax abatements that the Solomon administration launched earlier this year.

The City Council will vote on resolutions to accept the audit and the corrective action plan next week.

The Council will also consider soliciting a contractor to create a new inventory of city assets. Viqueira said the city plans to have that inventory complete by September 2027.