October 25, 2012
DiNapoli: Inadequate Oversight Contributed To Newburgh's Poor Financial Condition
Newburgh officials failed to accurately track the city's budget which led to millions of dollars in shortfalls and a higher than necessary tax hike for residents, according to an audit released today by State Comptroller Thomas P. DiNapoli.
The audit revealed the city, after failing to account for a $1.3 million deficit, passed an unbalanced budget in 2010 that created a new $6 million shortfall. The city then closed the gap in 2011 with a 41 percent tax levy increase.
DiNapoli's auditors determined the city's inaccurate financial records and the failure to address poor recordkeeping practices hindered the city council's ability to monitor financial operations. Auditors found Newburgh's financial position was essentially unknown to the city council for five years.
"For too long, oversight of the city's finances was unacceptably weak," said DiNapoli. "Although the city made progress in addressing its budget condition after our audit was complete, Newburgh still has considerable financial issues that require continued attention."
In Newburgh, city managers and comptrollers failed to perform the routine and basic activities needed to maintain complete and accurate records. City council oversight was so diminished that the poor condition of the accounting records went unnoticed from 2007 through 2010. Officials also failed to prepare and file the city's annual financial reports to the Comptroller's office in a timely manner for a number of years.
Additional audit findings include:
As a result of the audit, DiNapoli's office made a series of recommendations. They include:
Current city officials disagreed with some of the audit findings and stressed that many of Newburgh's financial problems were the result of unrealistic budgets and poor financial oversight during previous administrations and that the audit does not give current officials enough credit for the corrective actions they have taken. Their full response is included in the audit.
Recently, DiNapoli's office unveiled details of a new fiscal monitoring system that will calculate and publicize an overall score of fiscal stress for municipalities and school district across the state. The 'early warning' system will identify those headed down the path to fiscal crisis sooner and give local officials and the public sufficient time to discuss options for turning things around.
For a copy of the report visit: http://osc.state.ny.us/localgov/audits/cities/2012/newburgh.pdf