After being criticized by the State Comptroller's Office for having a budget that isn't properly funded, Dunkirk city officials have completed their own written response.
Councilman-at-Large A.J. Dolce said Thursday that he had all the signatures necessary on the letter and was mailing it out today.
"I'm satisfied with the final product. I'm extremely satisfied with how well we have been working together as a council to address the concerns of the state," Dolce stated, when asked about his thoughts on the letter. "Obviously, we didn't come up with concrete plans on everything the state wanted, but this is the first step in a long process of coming up with a long-term plan to address the city's financial needs.
"They repeated a lot and I think we addressed the major points. Only time will tell if we gave them as much detail as they wanted."
Steven J. Hancox, the deputy comptroller for the Division of Local Government and School Accountability, signed the December audit letter that said the audit results had been discussed with city officials. The audit analyzed whether the projected revenues and appropriations in the 2010 budget were reasonable.
"We found that the water and wastewater funds' continued reliance on the general fund to cover operating shortfalls and provide cash flow, and the lack of adequate user rate or tax rate increases, has caused a further deterioration of the city's overall financial condition," Hancox stated. "In addition, we have identified over $700,000 of risks (understated costs, revenues that may not be realized) in the proposed budget.
"Furthermore, capital improvement costs appear to be underestimated, representing less than 1 percent of the proposed budget's total appropriations, and the city still lacks a multi-year capital plan to help set long term spending priorities."
Dolce talked about the city's reply, which stated officials had raised the water and sewer rates, based on a three-year average. Establishing a long-term capital plan was a big concern with some discussion about hiring the city's outside auditors, Johnson Mackowiak & Associates LLP, to accomplish the task.
"We haven't decided if we're going to need to pay for a separate five-year plan. We have tons of plans; I was given five or six plans when I joined council in 2003," Dolce said. "That could end up being another plan that nothing really comes of it, but we need to have some sort of long-term plan and if that means working with the auditors on a yearly basis saying, 'hey, what can we do this year to get this amount of equipment?' Then I'd be fine with that.
"That was more of a response to the auditor, that we don't have a long-range plan."
Dolce was asked the answer to those who would ask why the city would need outside help for a five-year plan.
"Obviously, you prefer to look inhouse and I think we do as much inhouse as we can, but sometimes you need someone who's not in the thick of things to take a look at your books and come up with the best plan," he replied. "It's just like when you're writing an essay and you go back to edit it. You don't catch all the mistakes, you need someone else to look at it and find those mistakes for you.
"We're far from perfect so I don't think it hurts to have someone come in. Not all the time, we can't afford that, but once in a while to say, 'hey, I think this is an avenue you should try."
The city's response also addressed transfers between the three funds, general, water and sewer, that the state has been concerned about. The city used the increase in sewer rates to eliminate the annual transfer from the general fund to the sewer fund that was set up when the sewer fund was separated from the general fund.
"The only way to address these temporary loans is to further increase our revenue sources or decrease our expenses. In working with independent auditors the temporary loans will be discussed and a reasonable payment plan will be implemented," the city's letter states. "This could be accomplished through possible auditor adjustments and additional revenue sources, or reduction in expenses. Every attempt will be made to address repayment of temporary loans in a timely manner within the current fiscal year to avoid accumulation on an annual basis."
Another are of concern for the state was the city's tipping fee being too high. The city said it was monitoring the refuse situation to compare revenues and expenses.
"We will be looking at all potential revenue sources, as well as our future contractual expenditures," the city's response stated. "The administration and council appreciate you providing us with this pertinent information and the effort that goes into reviewing our 2010 budget."
Dolce said the comptrollers office sent the same two auditors in both 2008 and 2009 but he didn't know if they would be back this year to review the 2011 budget when it is proposed by Mayor Richard Frey.
In addition to Frey and Dolce, council members Michael Michalski (First Ward), Kevin Muldowney (Second Ward), Rose Floramo (Third Ward) and Stacy Szukala (Fourth Ward) signed the city's response. City Treasurer Mark Woods and Fiscal Affairs Officer James Curtin played key roles in drafting the city's response.
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