The City of Little Falls is experiencing “significant fiscal stress,” in part due to excessive fund balances, a lack of proper oversight, and a budget calendar that the city borrows annually, according to a recent audit report by the New York State Audit Office.
The report notes that the city golf fund had to borrow from the city’s general fund to cover deficits, while the general fund borrowed from the sewage fund to cover a shortfall. In addition, money was transferred from the capital fund to the general fund, which depleted the capital fund.
According to Mayor Mark Blask, the city has 90 days to present a corrective action plan to the state.
“We’re working on it now. We take it very seriously. We’re looking for stability,” he said.
One area in which he wants stability is the city treasurer’s office.
“We had three treasurers in eight months,” said Blask. “That’s a lot of sales.”
At the beginning of the pandemic there were revenue shortfalls, he added.
David Petkovsek, who served as city treasurer for more than 30 years, retired at the end of May 2020. Robert Peters Jr. was appointed as his successor until the next election in November this year, but left the job in February. Kathy Prestopnik, a senior account clerk, acts as the city’s deputy treasurer.
Referendum set
The Joint Council passed local law in May that would amend the city charter to make the treasurer’s position an appointed rather than an elected one, but the final decision rests with the city voters. A vote is scheduled for August 17th.
City Charter:Little Falls town voters will decide whether to appoint the position of treasurer
It remains to be seen whether the report’s recommendation to reconcile the budget calendar and fiscal year will be incorporated into further planning.
“We’re going to consider it part of the process, but that’s difficult,” said Blask.
The city’s fiscal year starts in January, but the Joint Council does not approve a budget until April, and property taxes are collected in May under the city charter. The city issues short-term tax anticipation notes each year to help cover expenses. From 2017 to 2020, that debt cost the city $ 36,620 in interest, according to the report.
“We collected taxes for decades in the spring. It’s in city law,” said the mayor. “We also have an older population who are used to paying their city taxes at a specific time.”
State Comptroller’s Office Assistant Press Secretary Tania Lopez said the State Audit Office’s bureau had another audit of a city collecting taxes three months into the fiscal year, but said the OSC considered it “a rare occurrence.”
The fund for the urban golf course has had a deficit balance since 2012, the report said.
The golf course has its own commission with its own budget, said Blask. The income comes from green fees and memberships.
“We have to look at these tariffs and make sure the golf course is financially sound,” he said.
The auditors found that the city’s general fund balance was inflated by an average of 50 percent in the 2017 and 2018 annual reports, and recommended that the city adopt a fund accounting policy. This policy should target the appropriate amount of fund credit to be maintained from year to year, and could be based on percentage of expenses or income, or on numbers for a specific number of months, according to Lopez.
The auditor’s office last reviewed the city’s finances in 2013 and addressed some of the same issues found in this report, including deficiencies in accounting records and bank reconciliations, she said.
Donna Thompson is the Times Telegram government and business reporter. Send her an email at donna@timestelegram.com.