Finances Get A-Plus

Town makes C.P.F. whole and builds surpluses

    East Hampton Town’s community preservation fund, which had been raided to cover expenses in other parts of the town budget during years of financial mismanagement under a prior administration, was made whole in the last quarter of 2011 — “a big accomplishment,” Len Bernard, the town budget officer, said on Tuesday as he presented a financial report to the town board. In addition, current financial management has enabled the town to end 2011 with a surplus in a number of other funds.
    “There is no money due to the C.P.F.,” Mr. Bernard said. The final, necessary repayment to the C.P.F. was one of the last pieces of the effort to untangle years of incomplete and improper financial practices, which resulted in an accumulated deficit of $27 million.
    With state legislative authority, the town had issued bonds to cover the deficit, borrowing about $5 million more than was needed on the advice of a financial consultant, Mr. Bernard said. A tight budget, with more revenue coming in than expected, and spending below what was anticipated, also helped build surpluses.
    The town’s financial standing is good, Mr. Bernard said, adding that a recent review by Moody’s Investor Service sustained the town’s A1 bond rating, and its “stable outlook.” 
    Charlene Kagel, an accountant for the town, said that at the end of 2011, the town’s main operating fund had a surplus of $6.8 million, with $2.4 million added to it during the year. The “B” fund, another operating fund, ended the year with a $1.4 million balance, with $223,400 built up during 2011. Also ending 2011 with a surplus were the town highway and capital funds, and the airport fund, which had a $2.1 million surplus.
    Although the board welcomed Mr. Bernard’s news, Councilwoman Theresa Quigley questioned whether the town should accumulate such surpluses. “Is it fair to tax people [for a] $63 million [budget] when we have $20 million sitting in the bank?” she asked, noting that the surpluses represent a considerable percentage of this year’s overall budget.
    “The answer is yes,” Mr. Bernard said. A town goal is to maintain a surplus in each fund of 20 percent of that fund’s overall budget, he said. He also explained that in devising the 2011 and 2012 budgets, the town had appropriated some money from surpluses in certain funds as revenue “in order to not overtax the taxpayer.”
    Town Councilman Dominick Stanzione congratulated Supervisor Bill Wilkinson, Mr. Bernard, and Ms. Kagel for their work on the town’s finances.
    “When we came into office,” Mr. Stanzione said, “it was almost incomprehensible that we would be able to get a handle on it in such a short period of time.”
    “We were actually talking bankruptcy at one time,” Mr. Wilkinson said. “The other thing that bothers me is the naiveté of some — and it’s come up in this audience — to say that was a one-time thing you’ve done with finance.”
    “If you understand finance, you have to attack the foundations of finance and put disciplines in place,” he said.
    Last year, Mr. Bernard reported, “we ended the year without adding any new debt,” with the exception of the borrowing to cover the budget deficit. Because some debt was being paid off, repayments on that borrowing was incorporated into the budget “without adding to the tax levy,” he said.
    The town’s outside auditing firm, Nawrocki Smith, should have a draft 2011 audit report completed in about a month, Mr. Bernard said. Ms. Kagel had prepared audit documents that will be submitted to the firm as well as the state comptroller, he said, saving the $15,000 to $20,000 it used to cost to have an outside firm do that work.
    In addition, Ms. Kagel said, an audit of the community preservation fund for 2011 has just been completed. The fund ended the year with an approximately $30 million balance, she said, though some of that money is committed for pending purchases.
    “We are actively pursuing properties on a routine basis,” Mr. Wilkinson said. In 2011, Mr. Bernard reported, $14.3 million came in to the preservation fund, from a 2-percent real estate transfer tax, and $16 million was spent to buy land.
    East Hampton is one of five eastern Suffolk towns selected by the state comptroller for routine audits reviewing Highway Departments’ expenditures, Ms. Kagel told the board. The review began last week and will last up to five weeks. The comptroller’s office will issue an overall report of its findings and specific reports for each town.
    Within Town Hall, Ms. Kagel said, audits by the budget office staff are continuing. An audit of LTV, the provider of local programming to which the town funnels a Cablevision fee, has been completed, she said, as has a petty cash audit. A look at how various town departments handle petty cash showed “very good results,” she said, and an audit of cash collection practices will begin in the summer.


Comments

Great news for all the residents of East Hampton. Too bad this Town Board is not appreciated for their outstanding results and accomplishments. This Town Board is taking care of business where it counts most in these financially difficult times, our pocketbooks. Job well-done and thank you for taking the hard stands and making a difference.
While I don't always agree with you Diana, in this instance you are right on the mark. Kudos to Len for his skill and tenacity in righting our financial ship of state. We salute you sir.
How long before the loan is paid off and we can reduce taxes?