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April 12, 2013

 

DiNapoli Recommends Better Budgeting in Wayne County

For the past five years, officials in Wayne County have adopted budgets with unrealistic estimates that generated a surplus of nearly $60 million, according to an audit issued today by State Comptroller Thomas P. DiNapoli.

“Budgeting practices in Wayne County have allowed officials to amass a significant surplus,” said DiNapoli. “In today’s economic climate, with resources scarce and property taxes a major concern, it’s more important than ever to have realistic budgets. This begins with developing budget estimates based on the most accurate and up-to-date financial information possible.”

Auditors found the county’s board of supervisors, from 2007 to 2011, over-estimated expenditures by approximately $28 million and under-estimated revenues by $8.8 million. These inaccurate budgets created an additional $21 million in operating surplus funds, leaving the county with a total accumulated surplus of $59.1 million.

Although a reasonable portion of fund balance should be used as a financial cushion in the event of unforeseen financial circumstances, the county’s surplus represents 47 percent of total expenditures.

The audit also found:

  • From 2007 through 2011, the county collected, on average, $35.3 million annually in property taxes;
  • The board of supervisors has not developed a written county-wide multiyear financial plan;
  • The county maintained five reserve funds with cumulative balances totaling approximately $10 million as of Dec. 31, 2011;
  • The county has maintained a sizeable balance in a tax stabilization reserve, but has made no expenditures from the reserve in the last five years; and

Moving forward, DiNapoli recommended the board of supervisors develop budget estimates based on prior years’ operating results, past expenditure trends and anticipated future needs.

DiNapoli also recommended that the county:

  • Develop a plan to reduce the unexpended surplus fund balance in the general fund in a manner that benefits taxpayers. This may include paying off debt, financing one-time expenses, or reducing property taxes;
  • Ensure that reserve funds are formally and properly established as authorized by law;
  • Review all reserves annually and determine if the amounts reserved are necessary, reasonable, and in compliance with statutory requirements;
  • Develop a multiyear financial plan and update the current capital plan; and
  • Adopt policies and procedures to govern budgeting practices that include determining a reasonable level of unexpended surplus funds to be maintained and addressing the accumulation of and use of moneys in reserve funds.

The county’s response to the audit is included in the final report. For a copy of the report visit: http://www.osc.state.ny.us/localgov/audits/counties/2013/wayne.pdf


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