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Lancaster's fund balances grew in 2011, financial audit shows

An audit of the Town of Lancaster's finances found the town saw healthy growth in its fund balances in 2011 thanks to an increase in revenues that outpaced the rising cost of government.

Lancaster collected more in sales tax that year, thanks in part to a new tax-sharing formula that rewards the town and its growing population at the expense of shrinking cities and inner-ring suburbs.

While the town's fiscal picture improved, the accountants who conducted the audit warned that the cost of paying benefits for retired employees is rising sharply.

"Good position to be in, because you're facing a lot of challenges. Doesn't get any easier," Wayne W. Drescher, a partner with the Drescher & Malecki accounting firm, said at the work session that preceded Monday's Town Board meeting.

Drescher, accompanied by Luke Malecki, reviewed the findings of the audit at the work session, and the Town Board approved the audit report at the full board meeting that followed.

The audit, which covered 2011, found the town had a balance in all of its funds of $6.6 million as of Dec. 31, an increase of $1 million over the previous year and the highest level in at least four years.

Even though spending rose by $1.2 million last year, revenues -- driven largely by an increase in property and sales tax -- went up by $2.9 million, the auditors reported.

Nonproperty taxes -- almost entirely sales tax -- rose by $480,563, to $4.2 million, from 2010 to 2011. Drescher attributed the rise to an overall increase in sales tax revenue in Erie County and an update to the tax-sharing formula that reflects the town's population growth relative to older communities in the county.

"Meaning your piece of the pie was a little bit bigger," Drescher said.

One area where revenues declined was court fines and forfeitures, which fell by $70,732, to $205,623 in 2011. When Town Attorney John Dudziak asked for an explanation, Drescher said the decline was due to fewer tickets written.

Drescher warned that the cost of employee benefits is continuing to rise. Payments the town is required to make on behalf of its employees into the state retirement system have risen from $1.2 million in 2009 to nearly $2 million last year, according to the audit report.

"This is the thing that's going to drive you nuts at budget time," Drescher said.

"It's driving me nuts right now," said Supervisor Dino J. Fudoli.

The auditors did not find any major problems. But they did find deficiencies in Lancaster's policies for the handling of cash receipts and information-technology security, and said better internal controls were needed.

Also Monday, the Town Board voted to approve the site plan for a $5 million Noco Express gas station, convenience store and mini-truck stop at the southeast corner of Walden Avenue and Pavement Road.

The 6,300-square-foot building at 4221 Walden Ave. also will include a Subway restaurant and a Tim Hortons with a drive-through, Tim Boyle, Noco's general manager of real estate, said in an interview before the Town Board meeting.

The Noco Express, Subway and Tim Hortons, combined, would employ 70 full- and part-time workers, Boyle said. If the project is approved, construction could begin in mid-August, and the facility could open in November.

The Town Board still must issue a special-use permit for the project because the property will be used as a gas station, board member Donna G. Stempniak said. A public hearing on this permit request will be held July 2.