State: Saugerties village must improve finances

Village officials recently received a copy of a state comptroller’s audit of village operations and they’re not happy. To comply with the state’s recommendations, the village would have to hire additional workers. That would mean increased taxes for all.

But according to the state, the village’s financial house is not in order. Auditors said local officials are not “adequately managing the village’s financial condition.” The auditor said the village’s fund balance was in excess of what was available “as a financing source in its annual general fund budgets,” and because of this shortfall had to regularly issue short-term debt “to meet cash flow needs, and relied on annual subsidies from both the water and sewer funds to finance general fund operations.”

Because of this, the auditors said, the village’s financial condition “has deteriorated, and taxpayers have paid interest on money borrowed to pay for operating costs.”

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Additionally auditors found that “users of the water and sewer systems are subsidizing the operations of the village’s general fund, (and) these user fees may be higher than necessary to finance the actual operations of these funds.”

Auditors found that the fund balance had been overstated by more than $152,000.

The audit looked at village operations between June 1, 2009 and Nov. 10, 2010.

 

Village reaction

In a written response to the comptroller’s report, village officials said that for the most part they agree with the findings, and “realize we need to make changes in order to improve upon accounting practices.”

In addressing the auditors’ budget concerns, village officials said that putting together a budget, “is not an exact science, and unfortunately budgets can be adversely affected by unforeseen events.”

Mayor William Murphy said that on two occasions, both the state and federal government promised funding and “in both cases we were forced to spend the money up front and be reimbursed. The reimbursements did not come in a timely manner from either agency,” the mayor said, “causing an unintended budget deficit of $150,000, which required the village to issue a RAN (revenue anticipation note) in May, 2008.”

Murphy also cites the poor economy, saying that 2008/09 budgets were hit hard, with the village receiving less in revenue than expected. Additionally an oil spill on village property cost $138,000 to clean up.

 

No one knew about new mandates

Another portion of the audit focused on the village’s IT network, which it deemed insufficiently secure. Auditors said the board needs to have IT controls in place to protect access to the Internet and email communications, and protect how data is stored so as to ensure that there is no misuse or alteration of data. But village officials said new hires would increase taxes. Village Clerk Mary Frank said she called neighboring municipalities to inquire if they had any of the policies and procedures in place. None had heard of them.

In response to the auditor’s report, Murphy said the village is now backing up all of its information and storing it offsite, and is in the process of drafting policies for Internet usage to “ensure our system is safe and secure.”

Board members said that all in all, the audit report was not that bad, and in fact helped bring attention on items, such as Internet usage, that need to be improved.

But they believe that as a small governmental entity they are doing a good job at “running the peoples’ business.”

There is one comment

  1. David Radovanovic

    This audit reflects a long standing problem. The last audit in 2002 had results similarly grim. There are many improvements that could be made to reverse this, though it’s necessary to have a Village board with enough backbone to implement politically unpopular decisions.

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