LOCKPORT – After the second scathing state audit of the City of Lockport’s finances in the past eight months – this one projecting that the city will run out of money next month – there was plenty of finger-pointing Wednesday.
The state Comptroller’s Office pointed at City Treasurer Michael E. White, saying the financial records kept by White are so poor, no one can tell how much money the city really has.
White told reporters that the blame for the city’s cash crunch lies with former Mayor Michael W. Tucker. White said Tucker overestimated non-tax revenue in the 2013 budget for the purpose of keeping taxes down and promised to obtain major concessions from city unions in contract talks. Only one of the five unions, the police union, made a deal.
Tucker pointed right back, telling reporters that the revenue estimates were made by a city board on which White served, and if White didn’t like them, he could have done something about it.
The Comptroller’s Office, in a cash-flow audit released Wednesday, placed the blame for the disaster on appropriations of surplus money the city thought it had, but really didn’t.
In a news conference in City Hall, Mayor Anne E. McCaffrey didn’t quarrel with the audit’s conclusions. She said the financial statements as of the end of 2012 “included account balances that were materially misstated.”
She said the city is working on a possible restructuring of the Treasurer’s Office, emphasizing the need for “the proper people in the proper positions with credentials that would guarantee effective accounting procedures.”
McCaffrey said White, whose term runs until the end of 2015, had told her that he was considering not running for re-election.
She declined to comment when asked if White should resign. Out in the City Hall parking lot, White vowed to complete his term.
“Why wouldn’t I? I’ve got nothing to hide,” he told reporters.
White, the brother-in-law of State Sen. George D. Maziarz, was appointed by Tucker to fill an unexpired term as treasurer in 2006 after White served six years as deputy Niagara County treasurer. He has won three elections since then, the last two without opposition.
He issued a statement acknowledging that the city had discussed doing away with the treasurer as an elected position and requiring a full-time accountant, perhaps a certified public accountant or someone with a degree in public finance.
Corporation Counsel John J. Ottaviano said such changes would require a City Charter amendment and a referendum, perhaps as soon as this November. He said White could not be forced out or have his pay reduced before his term is up.
The auditors wrote, “The treasurer is responsible for maintaining accurate and up-to-date accounting records and for providing accurate financial reports to the Council so they can monitor and control city finances. The city’s accounting records are in such poor condition that city officials do not know the severity of their fiscal problems.”
But they estimated that the city’s “cash deficiency” will rise to $4.6 million by the end of this year unless something is done to reduce costs or provide an emergency cash infusion.
The city obtained passage of an emergency borrowing bill by the State Legislature in June, which would allow it to issue up to $5.35 million in 10-year bonds to pay off the accumulated deficits.
However, Gov. Andrew M. Cuomo has not signed the bill, and his office insisted that the city grant the Comptroller’s Office a veto over its budgets for the next 10 years. The city agreed to that condition, McCaffrey said Monday, but Cuomo has yet to act.
The mayor said if Cuomo signs the deficit-financing bill, the city will be able to make it to the end of the year. If for some reason Cuomo doesn’t approve the bill, McCaffrey said the city would do another short-term borrowing, just as it did last October, borrowing $2.7 million to get through 2013.
She said she wasn’t sure if a tax increase would be needed for 2015.
The city’s official response said further reductions in personnel or other expenses may be needed during this year. Also, the city may ask for an expedited payment of its annual state aid, which normally comes at the end of the year, and also might delay making its state-mandated payment to the public employee pension fund from December until February 2015.
McCaffrey said the city still plans to go ahead with the abolition of the Fire Department’s ambulance service, with a target date of Sept. 15, two weeks later than previously announced.
She said not until then will the city implement the reduction in minimum staffing on each Fire Department shift that it approved in April.
The Fire Department has by far the largest overtime tab of any city department. It was projected to reach $1 million this year without the cutbacks.
The city bills about $600,000 a year in ambulance fees, but McCaffrey said it costs about $1 million to provide the service, so the city is saving money by dropping it.
“We absolutely will not impact on public safety. We will staff the Fire Department within a range that is safe according to the fire chief and our Fire Board,” McCaffrey said.
White blamed the long-term absence of employees because of illness as a reason for the financial records falling out of date.
“It was the chief accountant, auditor and fiscal account clerk. What can I say?” White told reporters.
He said the city suffered from poor communication. “There were periods of time when I didn’t talk to somebody for a couple of years,” White said, meaning Tucker. “A lot of assumptions without a lot of forecasting led to the demise of our cash.”
“I don’t know what that has to do with reconciling accounts and closing out books,” Tucker responded. The city’s 2013 financial statements won’t be done until October, the audit said.
White voiced full support for McCaffrey, who succeeded Tucker when the latter resigned Feb. 21. “The mayor we have now has been a godsend,” White said.
The city’s 2013 budget was built on the assumption that the city still had a fund balance. A previous audit issued by the state in December showed the city was already more than $1.1 million in the hole at the end of 2012, but didn’t realize it because of poor record-keeping.
“If you read the comptroller’s report, the city officials were really in the dark,” Tucker said.