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April 10, 2014

State audit criticizes Milford finances

Comptrolled urges town to use 'realistic' budget

By Joe Mahoney The Daily Star
Cooperstown Crier

---- — The state Comptroller’s office has released an audit of the town of Milford that criticizes the manner in which town finances have been managed and suggests that the town adopt budgets that are “realistic.”

The state agency, headed by Comptroller Thomas DiNapoli, urged the Milford town board to stop relying on appropriated fund balances and other one-time revenue sources to fund recurring expenditures.

The state auditors also called on the town government to ensure that monies are repaid to the town-wide general fund that were “inappropriately transferred to a fund with a different tax base.”

The monitors, who routinely audit the books of local taxing jurisdictions, said the Milford board did not consider actual historical results when adopting its budgets from fiscal years 2009 through 2012.

“Also, in an effort to keep the real property tax levy low, the Board included the use of fund balance in each of its adopted budgets to finance operations from fiscal years 2009 through 2013,” the audit stated.

With approximately 3,000 residents, Milford is one of the most populous communities in Otsego County.

DiNapoli’s report said that the board’s “overreliance on fund balance as a financing source kept the tax levy artificially low during these years and ultimately exhausted fund balance. The exhaustion of fund balance will have a significant impact on the financing of future budgets and the ability to maintain current service levels.”

The report went on to note that after Milford’s fund balance was reduced, town officials passed a local law to override the state’s 2 percent property tax cap for the 2014 budget and increased taxes by 6.4 percent. “To avoid overriding the tax cap in future years’ budgets, the Board will likely need to develop budgets that have other financing sources to ensure services will continue to be provided to Town residents at the current level. Otherwise, reducing expenditures and service levels will be the only option for the Town to avoid severe fiscal stress.”

In responding to the audit, Milford Town Supervisor Chris Harmon, who was elected in November 2011, said he specifically agreed with the finding that the town should avoid using unappropriated fund balances for recurring expenditures.

“The reality is that the town of Milford is clearly not in a good financial position,” Harmon wrote in response.

The town, he added, held the line on tax increases from 1994 to 2012 despite the fact that costs for fuel, fire control, equipment and other areas of spending were rising. Harmon said the system of bookkeeping by the previous supervisor was “not transparent nor helpful in understanding the financial status of the town.”

Harmon also said the tax increase was needed for the 2014 budget because the town was not garnering sufficient revenue and needed to move forward with a revaluation of properties.

The supervisor also took issue with what he called the “piecemeal fashion” of the audit, noting, “We find it somewhat ironic that the Comptroller recommends the town develop and implement a comprehensive financial plan while not having a comprehensive process of its own for reviewing a town’s financial condition.”

Harmon also questioned why the audit made no mention of the town’s need to have a revaluation. “The town of Milford has not conducted a revaluation for 20 years and we are now looking at the prospect of finding the $120,000 required to fund it,” he said in his reply. He further pointed out that the town is in the process of selling a residential property adjacent to town hall in order to come up the funding for the revaluation.

The supervisor also notes that the audit makes no mention that the town has recently reduced the salaries of town board members, including the supervisor, the town justices, the tax collector, the town clerk, the town attorney and the assessor.

Harmon also said the town will this year be addressing the need to come up with a comprehensive, multi-year financial and capital plan.

The full Milton audit and the town supervisor’s response can be viewed on the Internet at: www.osc.state.ny.us/localgov/audits/towns/2014/milford.pdf