Hugh Reynolds: Mischief in numbers

Last November, about midway through the annual county budget adoption process, Ulster County comptroller Elliott Auerbach alerted legislature chairman Ken Ronk to what some might have considered a startling development. Writing on November 16, Auerbach advised Ronk that the legislature’s long-time budget review accountants, PFK O’Connor Davies of Westchester, had settled a dispute with the federal Securities Exchange Commission on charges of “issuing fraudulent audit reports” regarding its auditing work with The town of Ramapo.

I appreciate that readers’ eyes tend to glaze over stories on governmental finance, but this one speaks more to governmental dynamics.

According to the SEC’s October 31 report, the firm and senior partner Dominick Consolo (since retired) “allowed the Town of Ramapo to record a $3.08 million receivable in its general fund for a property sale [that] Consolo knew had not occurred.” At the time, the investigation of other fraud in the town was made known to Consolo, according to the SEC. Something was seriously rotten in Ramapo, a Rockland County town of some 135,000 people. The town supervisor and others will go on trial on federal fraud charges next month.

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Consolo and the firm consented to the SEC order “without admitting or denying the findings,” but paid $555,000 in penalties, including a $380,000 reimbursement of audit fees and interest to the town. Consolo was suspended from the public practice of accounting.

 

No initial response from Hein or Ronk

At the time, the Ulster legislature was reviewing county executive Mike Hein’s proposed 2017 budget, in which he proposed to cut some $200,000 in staffing from Auerbach’s department.

“Given the firm’s reckless gaffes in judgment, we feel it necessary to at least question the integrity of all work performed to date,” Auerbach further advised in his November 16 letter to Ronk. Auerbach recommended that the county immediately sever relations with the firm as budget analyst and consultant, forward all information on the 2017 budget to a third-party consultant, and hire a new consultant (presumably for next year) “other than PFK O’Connor Davies.”

In what he called “a collegial effort,” Auerbach did not make public the advisory or his recommendations. “I wanted to keep it internal, with the hope they would take action on what I saw as a very serious situation,” he told me last week.

He said he received neither a written nor a verbal response from the legislature or the executive.

Auerbach, embroiled in a lawsuit against the county to restore the aforementioned departmental funding, went public with his advisory letter last week. His lawsuit has a philosophical component, questioning whether the executive or the legislature should have the authority to reduce the budget of a constitutionally designated department designed to overview county financial activities.

Ulster County government is routinely audited by other public and private agencies. O’Connor Davies is a relatively recent addition. For a $75,000 fee, the firm, which is hired by the legislature, examines the executive’s budget as submitted to lawmakers. Typically, its representatives interview members of the executive branch to verify its assumptions and conclusions. Projections on sales-tax revenues would be one example, appropriation of fund balances another.

The firm then presents its findings and recommendations to the legislature prior to its formal mid-December vote on the budget. Rarely has the firm taken the executive to task. Nor has the legislature. A shift of one-tenth of one percent, about $320,000 on a $325-million budget, would be unusual. Hein and his budget people say they’re good, but 99.9 percent good? If the consultants doing your books give you an almost perfect rating almost every time, why switch?

Ronk’s response went to the lowest common denominator: politics.

“For one thing,” he said, “it was a different department [of O’Connor Davies] that had nothing to do with Ulster County. We have always had a good working relationship with the firm and its representatives. Elliott is playing politics again.”

O’Connor Davies, through a spokesperson, issued a similar statement: “The situation in the Town of Ramapo was an isolated incident involving a single partner [Consolo] and it will not affect our other municipal clients,” the statement said. “The partner involved no longer works at the firm and has never been involved with any work with Ulster County.”

Not quite “never.” County records show Consolo was involved in the process of securitization of tobacco revenues about 20 years ago.

Auerbach, declared Ronk, “is just playing politics,” first in attempting to influence the legislature last year (which ultimately restored half of Hein’s reduction) and lately because of the lawsuit. He did not mention that Auerbach will seek a fourth term in office in November.

O’Connor Davies made no recommendations regarding the proposed cuts to Auerbach’s department. Charges of “politics” cover many a butt. That the legislature and the executive will resist oversight by the comptroller has long been apparent. So much for checks and balances.

 

Blood in the water

Beleaguered congressman John Faso, Republican of Kinderhook, doesn’t face the voters for another 600 days, but already Democratic challengers have surfaced. The Times Herald Record reports that Mitchell Brisbee, 26, of Walden, plans to move to Gardiner. Brian Flynn, 47, lives in Hunter. Antonio Delgado, 40, lives in Rhinebeck. All three have filed preliminary paperwork with the Federal Elections Commission, as has Faso, 64.

The next names up, I predict, will be former Faso foe Zephyr Teachout, 45, of Dutchess County and Ulster executive Mike Hein, 51. Hein “dropped out” of a congressional race he never officially entered in late 2015, citing family concerns.

Less than robust returns from his 2015 reelection (55 percent of the vote) may have been a factor. But by the time Faso faces the music a year from November, Hein’s only child will be in college. As for repairing his majority, I note that the Hein PR machine has gone into overdrive in recent weeks with his support for tiny homes and electric cars.

The exuberant Teachout has been criss-crossing the district ever since she lost by eight points to Faso last November. What better forum for this establishment-fighter than the weekly anti-Faso rallies we’ve witnessed since he took office on January 1?

Faso, like most who make it to three-score-and-four (last August 25), is ready to hum the Beatles’ “Will You Still Love Me When I’m 64?” Will they still love the man recently called by some opponents “squishy” (for his meandering explanations of complex subjects) at a rally in Kingston when he’s 66?

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Springing forth

Like crocuses in March, election-bound legislators are beginning to stir. The usually reserved Herb Litts, Republican of Highland, seeks to have the bad-mouthing of emergency personnel defined as “hate crimes.” Though it’s not a hate crime to talk back to a cop, it’s not very smart, either.

PR purveyor Dave Donaldson, Democrat of Kingston, seeks a charter change whereby the executive would be required to secure legislative approval for internal budget transfers, presumably in excess of $50,000 (the threshold for legislature review of contracts). Donaldson, a former chairman, knows better than most that this won’t clear the legislature, but it will look good on his campaign brochures.

Comptroller Auerbach, not yet officially announced for reelection, has been making the rounds of Democratic town committees. Republican county clerk Nina Postupack, also up for another four-year term in November, has been working the grass roots. Republicans, outnumbered by about 14,000 enrollees countywide, matter, but not nearly as much as Democrats and voters not enrolled in either major party. Party leaders are no doubt contemplating cross-endorsements.

The 23 members of the county legislature are also on the ballot, with no more than three seats actually in play.

There is one comment

  1. The Third Eye

    Hey Hugh…Which three Legislative districts are in play, do you think? I would presume you mean 2, 8 and 16?

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