Democrat and Chronicle

Because of poor fiscal management and budgeting, and lax oversight from the Town Board, Gates went from a $1.7 million surplus in 2000 to a $2.8 million deficit in 2005, a decrease of $4.5 million, according to an audit released by State Comptroller Alan G. Hevesi this morning.

The 2000-05 deficit of $2.8 million does not include an additional projected shortfall of more than $1 million in 2006.

The audit reviewed the town’s financial records and procedures from January 2001 to December 2005. In November, the comptroller’s office also released a review of the town’s 2006 budget.

The Audit

I read the audit, the Town’s response, and the audit response. This is as damning an audit as I have ever seen in over 20 years of accounting.

Three issues, not responded to by the Town, jump out as significant.

The first is the use of agency funds and deposits for other purposes, to pay expenses from other funds. This was not the town’s money. It was held in trust and it is and was a very improper accounting practice to use it for any purpose. It belongs to other people and agencies and should not be used without their permission.

Another issue is the transfers between funds. Both law and regulation govern how, when and why such inter-fund transfers are made. They also inclue timing for repayment. For much of the audit, the Town was in direct violation of such rules.

Lastly, the massive, truly massive fund balance deficits. The combined deficit is over 12% of the annual budget. It will take years to bring that sort of deficit down, and break even or run a surplus. Appropriating non-existent fund balances into the budget, as was done in 2006, is just plain crazy.

The town supervisor’s response to the audit failed to directly address the major accounting and finance issues raised by the audit. Instead, he was reduced to raising political strawmen and taking credit for making minor corrections after the issues were brought to his attention. The audit does not indicate political hackery or some Democratic conspiracy. It details years of improper practices and an administration that appears to ignore or not care about the financial hole that the Town of Gates is now in.

Solutions: Cut payroll and raise taxes. As painful as that may be, the Town must take action to address the deficit. How many administrative staff does the Town need? Does the Town need its own police force? These, and other serious considerations have to be on the Town Board’s agenda in the immediate future.

If the Town of Gates were a private company, the stockholders would demand changes in leadership. There would have to be changes at the Board level as well as among the executives. Elected officials don’t bear that level of responsibility, though the voters of the Town of Gates should certainly think about it long and hard before the next election. The money being so carelessly flung about is their money. It is not the personal property of the Town Board or the Supervisor. It belongs to the voters and taxpayers of the Town and they deserve a well-run, fiscally sound town government in return for the money they are forced to pony up.

The Supervisor stands firm on the statement that
There is not one cent missing from our funds. Every single penny is accounted for on our books.

Of course, that was not the purpose of the audit, nor any part of its conclusions. Mr. Esposito, you’ve spent far more than you took in. And, it appears that your administration lacked the ability to know this, because of poor internal practices and improper use of existing funds. The alternative, Mr. Esposito, is that the Board and the Supervisor did know everything that the audit revealed, and just did nothing. Which would you rather be, ignorant or careless?

In closing, Yonkers and Erie County can certainly provide a glimpse into the possible future of the Town of Gates. New York State took over their finances after they made a muddle of them. Is that what will happen to Gates?