Riverhead Town’s independent internal audit has revealed that the town saved some $900,000 more than it expected when it budgeted for 2012.
(The News-Review reported live from the meeting; click below to see what else happened.)
But the town’s fund balance, or reserves, still dropped by $1.7 million that year, according to the findings.
The town had budgeted to use $2.6 million in fund balance.
“The trend is not good,” Jack Orben, a retired investment banker now serving on the audit committee, said during a presentation of the audit’s findings before the Town Board on Thursday.
Among the chief reasons listed for the $900,000 difference, was that benefit payments to town employees were less expensive than anticipated.
Though it was good the town lost less money than it had expected, the losses overall are still worrisome.
Problems could prove to be “catastrophic” if the town keeps depleting its fund balance, the auditors told the board.
The audit committee members agreed that the town’s landfill debt — about $4 million per year until 2023 — was the primary cause of the town’s financial issues. In recent years the town has had to dip into its reserves to reduce the impact of accumulated debt on taxpayers to avoid a tax spike.
Supervisor Sean Walter said the town needs to sell land at the Enterprise Park at Calverton next year or face that significant tax increase to up the town’s revenues.
“Next year is the year of reckoning,” he said, adding that the town is looking into taking out mortgages against unsold EPCAL land as a last resort. Mr. Walter blamed previous administrations for paying the minimum amount on the town’s debt and running up costs “like a credit card.”
The audit also revealed five control deficiencies related to the town’s financial statements, four less than last year’s audit. Of those deficiencies one was a “material weakness” — the most serious type of deficiency. That weakness, related to the town’s aging software, was also identified on last year’s audit.
Earlier this year, town officials approved the installation of new switches to the town’s hardware to help solve that problem.
Three remaining “significant deficiencies” — the second most serious offense — were related to the town’s Federal Emergency Management Agency project on Horton Avenue, which ran over costs by about $2 million this year and is now on hold, according to a previous News-Review report.
Still, auditors praised the town’s work to cut back on deficiencies.
“We’re pecking off what we can as we can,” said town accounting chief Bill Rothaar.
Check below to see the full recap of the work session: