Dyster Explained Away Misdirected and Unaccounted for Money to NYS Comptroller

 

The NYS Comptroller’s 2013 city audit raised many questions regarding Dyster’s many fiscal mysteries, and yet the audit has remained largely ignored by media and taxpayer alike.  

Last week we reported how Mayor Dyster responded to the NYS Comptroller’s 2013 financial management takedown in a mayor’s four page “the dog ate my homework” reply to the state. The mayor’s defensive-abrasive letter denied the mishandling of city funds and went so far as to blame the city’s fiscal distress on the (then) disagreement between the Seneca Nation and NYS: a disagreement that resulted in the city’s share of casino revenue being delayed. The Comptroller rejected Dyster’s excuse.

Nowhere in the 26-page state audit are the potential answers to Dyster’s world of magical mystery finance more on display than on page 12. As the subject of this article, and as promised in last week’s Reporter, we’re going to take a look at what page 12 contained with regard to misdirected and unaccounted funds.

Page 12 reads in part, “The City’s capital projects fund includes a significant amount of financial activity and that must be accounted for and reported for appropriately. Capital projects should be accounted for separately to ensure that the funds allocated by Council action are used for only for the specified purpose. Once a project is completed, it should be closed and any unexpended balance disposed of based upon the source of the project’s funding.”

In other words if a capital street paving project in the amount of $400,000 ends up costing $300,000, the $100,000 balance must be returned to the general fund. 

However, that didn’t always happen, as noted by the NYS Comptroller on page 12, writing: “The (City) controller has accounted for a substantial amount of unassigned fund balance in the capital projects fund. As of December 31, 2012, the fund balance of these funds was $7.1 million of which $2.9 million will be transferred to the general fund in 2013. The (City) controller also stated that she was aware that these moneys should be returned to the general fund as unassigned, but was reluctant to do so, expecting that City officials would use these moneys in their entirely to reduce the tax levy or increase appropriations.”

Money was being misdirected in order to keep it away from “city officials.” Who are these city officials that were being kept in the dark? The audit doesn’t say. The city council has, as its principal responsibility, the management of the budget. We have a situation here where budget data was potentially hidden from the duly elected mangers of budgetary affairs for fear that they may use it to reduce taxes or spend the funds.

How does the mayor address this problem of misdirected funds? On page 3 of his 4 page reply to the NYS Comptroller, he wrote: “With respect to that portion of the Report (audit) dealing with ‘Recording Financial Activity’ it was pointed out that surplus funds remaining from capital projects should be returned to the General Fund. This is precisely what the City did, and did pursuant to multi-year financing planning.”

The State Comptroller’s audit directly conflicts with Dyster’s claim as the NYS Comptroller referenced the city controller’s statement on page 12. It appears that the mayor was aware, and accepting, that the city controller withheld funds for fear that “City officials would use these moneys in their entirety to reduce the tax levy or increase appropriations.”

Dyster further writes, “The Report (audit) goes on to mention that City officials were unable to demonstrate the total amount of unassigned fund balance in capital projects which could be returned to the General Fund. It should be pointed out that the City Controller’s office would have no knowledge of the status of various projects and whether they have been concluded and whether there are dollars to transfer. This information would be more the purview of the Engineering Department, which faced severe challenges in making such determinations.”

Only Dyster’s finance department has the authority or capacity to write checks, make payments and cause money to move in city government. In spite of the facts the mayor, rather curiously, threw the “Engineering Department” under the bus regarding the unaccounted funds.

As for the exact amount of those unaccounted funds, page 12 of the audit reads, “Beyond the amount reported as unassigned fund balance in the capital projects fund additional funds may remain in other projects which should be returned to the general fund. As of the end of our fieldwork, City officials were unable to demonstrate, and we were unable to definitively establish, the total amount of these other moneys. However, based on our review of the records, we conservatively estimate the amount could range from $1 million to $1.4 million.”

It appears that the answer to the mystery of the unaccounted millions is to be found somewhere between Mayor Dyster’s office, the Finance Department and the Engineering Department.