Auditor finds reasons for fiscal crisis

A year after city officials uncovered a projected $10.25 million deficit that led to the declaration of a fiscal crisis, an independent audit released last week shed light on the city’s financial decline, illustrating missteps ranging from overestimated revenues to missing files.

City officials have often cited the deficit as a symbol of the previous administration’s mismanagement, which led to a number of short-term borrowing measures and a three-year surcharge that appears on residents’ tax bills to help pay down the deficit.

The audit, which covers the 2011-12 fiscal year, ending June 30, was released on the same day that officials passed an $83.4 million budget for fiscal 2013-14, which they described as a balanced budget for the second year in a row.

Shortly after taking office in January 2012, city officials projected the $10 million deficit in the general, sewer and water funds, and attributed it to unrealistic estimates of revenues and a failure to control expenditures. City Manager Jack Schnirman said that the audit, by the Hauppauge-based Albrecht Viggiano Zureck & Co., confirmed the deficit projection. Last year, Schnirman outlined a number of steps the administration had taken that had cut the deficit by $1.2 million.

According to the audit, however, the city’s overall fund balance, which Schnirman likened to a savings account, was $5 million in the red as of last June 30. That prompted criticism that officials had exaggerated the severity of the city’s finances by overestimating the deficit by half, and had delayed the release of the audit — officials attributed the delay to Hurricane Sandy — to coincide with the May 21 budget vote.

Councilman John McLaughlin, the lone Republican on the council, who voted against the budget after he requested another week to find additional cost savings, said he would have liked more time to review the audit’s findings.