Press-Republican

November 27, 2013

State audit scolds Essex County

By LOHR McKINSTRY
Press-Republican

---- — ELIZABETHTOWN — The State Comptroller’s Office is scolding Essex County lawmakers for allegedly using too much fund balance in the last three yearly county budgets.

The report said the financial condition of the county has declined over that time period as a result.

“This occurred because the board adopted budgets for the general fund that were not structurally balanced,” the audit says.

“Instead, the (County Board of Supervisors) routinely relied on appropriating significant amounts of fund balance to finance operations.”

$12.3 MILLION IN 3 YEARS

County Manager Daniel Palmer responded that cuts in state and federal aid, a 2 percent tax-levy cap and increasing state mandates have made it difficult to balance any budget without resorting to use of available fund balances.

Essex County used $12.3 million in unexpended fund balance to reduce the tax levy for the years 2010, 2011 and 2013, the audit says.

REDUCED USE

The county has so far proposed a 2014 budget with a 15 percent tax-levy increase, but it uses little of the fund balance, in keeping with the state’s suggestions.

Supervisors have also begun the process of overriding the tax cap so they can increase the amount raised by property taxes more than the 2 percent limit.

A special meeting on the budget is scheduled for 9 a.m. Wednesday, Dec. 4, in the Old County Courthouse at Elizabethtown. It is open to the public.

PAYROLL CONTROL

The audit also criticized the county for allegedly having lax internal controls over payroll.

“As a result, we found that employees were both over- and underpaid, and that employees’ leave accrual records were not properly maintained.”

TIPPING FEES

The report also hits on allegedly insufficient fees charged to towns for the county solid-waste-disposal system in the previous three years covered by the audit.

The tipping fees were again not increased in the budget for 2013, resulting in a $347,000 deficit, the audit claims.

The county pays contractor Serkil LLC $50.25 a ton and $510,000 in annual maintenance costs, the audit said, then charges towns a flat $55.25 a ton for trash disposal, resulting in deficits for the county.

The audit’s overall recommendations were: adopting structurally balanced budgets, setting adequate tipping fees and developing a multi-year capital plan.

STATE POLICIES BLAMED

County Manager Daniel Palmer deferred comment on fund-balance usage to his three-page response letter to the audit’s findings. He has consistently told the Board of Supervisors it was an improper use of fund balance, but he was overruled each time, he said.

On the payroll issue, he said, they will be installing bio-metric time clocks, at a cost of $90,000, to ensure that employees are working when they are supposed to be.

In his letter, Palmer said the county did not disagree with the audit but believes the primary cause of fund-balance over-usage is New York state.

“The cost of local government has been driven by all state and federal mandates. Included within those mandates is the New York State Retirement Fund, which has exploded on local governments with little, if any, relief in sight.”

He said 20 percent of their payroll costs are driven by the Retirement Fund. The county contribution was $1.79 million in 2008, mushrooming to $4.5 million this year, Palmer said.

At the same time, the county has lost $4.5 million in revenue from state and federal sources since 2008.

Then the state came along with its 2 percent annual tax-levy cap, Palmer said, resulting in local governments like Essex County reducing services and cutting staff in order to stay within the cap.

BAND-AID

The county also removed equipment purchases and delayed capital-improvement projects, he said.

“If we were a private business, this practice would signal that we were preparing for the point in which we would close the doors and go out of business.

“As a government, we don’t have that as an option; therefore all that has been accomplished is a short-term response to a long-term problem.”

He concluded that the problems with the garbage fund will be addressed and corrected in the 2014 county budget.

Email Lohr McKinstry:lmckinstry@pressrepublican.com