FOR RELEASE:

DiNapoli: Newburgh's Shortfall Could Exceed $6.3 Million

The City of Newburgh's budget shortfall for the 2010 fiscal year could be more than $6.3 million if city officials don't take steps to close the gap, according to an audit of the city's budget released by State Comptroller Thomas P. DiNapoli. Auditors were unable to fully determine the amount of the budget gap because city records were lacking pertinent information. DiNapoli directed auditors to conduct the budget review at the request of the acting city manager and members of the city council.

"Newburgh's financial problems are severe," said DiNapoli. "Like many municipalities across the state, Newburgh is facing very difficult problems and equally difficult choices. This is a very serious budget imbalance that could have severe consequences for the city if it goes unaddressed."

DiNapoli's auditors described the city's projected expenditure and revenue projections as "unreasonable." DiNapoli noted that the city, which has experienced significant turnover among city officers charged with handling financial matters, had not issued an annual financial report to the Comptroller's Office as required for 2008, and its 2009 statement was incomplete.

In reviewing the budget, DiNapoli's auditors found the following:

• Although the city purportedly appropriated $5.5 million in fund balance moneys for expenditures, there is no evidence in accounting records that this money even exists;
• If in fact this money does exist, the use of this non-recurring funding source will cause the city to face a shortfall of at least this amount when it prepares its 2011 budget;
• City officials over-estimated revenues from payments in lieu of taxes (PILOT), sewer rents, and water facility charges in the budget by approximately $601,000; and
• City officials underestimated appropriations for debt service payments by $227,000 and there is no money in the city's contingency fund for emergency expenses.

DiNapoli recommended that city officials review his report and correct the imbalances found in the 2010 budget. The city has indicated that it will seek deficit financing authorization. For a copy of the audit, click here.

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