City Accountant Jeffrey Zellner Addresses North Tonawanda Common Council

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City Accountant Jeffrey Zellner

 

By: Jeffrey Zellner

North Tonawanda City Accountant

I am new; I was on the job for a month by the end of this audit process which has been dragging on for over seven months. – I, like you, read the audit as a draft and was very nervous.

As the accountant, I understand it is my responsibility to provide the mayor and the council with timely and accurate data and an accurate picture of the city’s finances. This clearly was not happening during the period in question. I am not going to rehash the absence of the citie’s only accountant for much of 2019. I can address the financial concerns as of today and address some of the findings in the audit:

 

Does NT have a “Balanced Budget”

    1. Money coming in = money going out (balanced budgets)
    2. The Term Structurally unbalanced means one time revenue sources will not be available the next year
    3. NT has a balanced budget; however, we do need to replace funds that are not recurring. This happens in every municipality and NT is no different.

Is the city at risk of running out of money?

    1. No immediate concern of city running out of money
    2. I am concerned that the state funding we should receive may be held up and that could be a problem if it is delayed
    3. Balance in the General Fund is projected to last until next year’s tax payments are due in April. City has borrowed from the Water Fund to guarantee payrolls in the early part of the year before taxes are due. This practice is criticized in the audit. All five council members voted in favor of it several years in a row, it is not illegal or improper according to the GASB, it is just not recommended. It was an effort to save interest on what they call a tax anticipation note, which municipalities can take out in tight periods. Whether or not it is good practice is up to the beholder, but it did save the interest payments and application fees.

 

Did we deplete the fund balance to unsafe levels

    1. Fund balance is the monies not used in previous years that ends up in a savings account and used for unanticipated expenditures
    2. The 2020 budget does not use any of the fund balance although it was used in previous years to avoid increasing taxes
    3. Comptroller Dinapoli’s office has cited communities for having too much in their fund balance and has recommendations on how low a fund balance can go
    4. As the accountant,  I would like to see our fund balance grow to make my job easier

Was the 2020 Budget prepared correctly?

    1. I was a little concerned that the 2020 budget, which had to be prepared without any help from the previous accountant, would be off
    2. Budget projections for 2020 were spot on if not a little conservative
    3. COVID will and has changed this and will have an impact going forward.
    4. In the 1st quarter our sales tax figures were higher than the projections, in fact we were $49,000 dollars higher than anticipated despite the state officials saying we overestimated
    5. I was very surprised to find that despite one of the audit’s Key findings saying sales tax projections were overstated, we are exactly close to where they projected even with COVID. As well as with our real property taxes coming in under 1% different from projections.

 

Was there wrongdoing or malfeasance alleged in this audit

    1. No wrongdoing is alleged
    2. monies are accounted for and the numbers balance

 

What are the recommendations from Comptroller Dinapoli’s office?

    1. NYS proposed solution is to raise taxes and/or cut services

 

What was the budgeting philosophy during the period in question?

    1. I spoke with the aldermen and the intent of the aldermen was to raise taxes as a last resort and to do more with less while maintaining a balanced budget
      1. NT has raised taxes far less than neighboring municipalities over the past decade,
    2. Keep water rates low: NT has not touched water and sewer rates for 10 years

 

What is the Current condition of the City?

    1. Housing prices are going up tremendously
    2. The real estate market is very healthy
    3. We have seen lots of business growth over the past several years

 

What do we do going forward?

    1. To be clear, Tax rates cannot be changed mid-year
    2. As directed by the council and mayor, I am currently preparing a budget for 2021 using new software that incorporates the latest industry standards for budgeting and spending.
    3. We are working with the department heads and the city officials to develop 5 year rolling projections to ensure we are responsible going forward
    4. I would like to see a few structural things addressed as it relates to the accountants role and responsibilities. I think much of this confusion stems from the lack of an accountant especially in the midst of a routine, but lengthy state audit
    5. During the nearly 7 month long audit, the previous accountant was not in city hall for most of this period and was not available to the auditors. I feel this hindered the auditing process.

 

This has been my first experience with state auditors as the City Accountant, and although I was hired near the tail end of the audit, I found them to be highly unprofessional. They were condescending and gave suggestions that they later claimed they did not endorse. Many of the suggestions were not based on accepted accounting practices (GASB) but were merely the opinions of the bureaucrats.

I believe this audit was very political in nature considering the 2017 audit of Niagara Falls is much more tame despite severe structural deficiencies. If you read both they are striking in how different the tone is.

I am not from the political world, thankfully so, and am learning as I go. I am becoming familiar with the city’s finances and based on what I have found, I see no reason to believe the sky is falling, as if it would appear if you read the newspaper. While the financial condition of the city could be better, I find it is much healthier than some of our neighboring municipalities that have raised taxes much more in recent years, and are still in serious financial troubles.

I believe North Tonawanda’s elected representatives have been responsible in their approach and will continue to be in the future. Going forward I will continue to work with the Mayor, the city council and the future treasurer to prepare a budget that is responsible and balanced.

 

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