Lockport city officials, meet Steve Martin. When it comes to explaining the inexcusable, the famed comedian is way ahead of you.
It was in a 1978 routine on Saturday Night Live that Martin explained how to be a millionaire and not pay any taxes. Simple, he said. When the tax man comes pounding at your door, you only have to use two magic words: “I forgot!”
Lockport city officials, it turns out, are expert at forgetting. They borrowed $800,000 three years ago and then forgot to remember that they had it. They were paying interest on the misplaced cash even as the city nearly ran out of money last year – or, at least, thought it did.
It’s incompetence on a shocking scale and while many of the people responsible for it are no longer serving in their positions, it is important for the city to ensure it has set up systems to avoid a repeat, and for State Comptroller Thomas P. DiNapoli to keep an eagle eye on the city’s bean counters.
It would be interesting to understand the process involved in losing $800,000. However it happened, it may be par for the course in a city where the problem isn’t simply that the left hand doesn’t know what the right is doing, even the fingers don’t know what the hand is doing. To wit:
Finance Director Scott A. Schrader forgot to tell Treasurer Michael E. White that he was recommending appointment of a new chief accountant, Cynthia L. Schilling of Akron, who was granted an exception to the city’s residency rule. She will still have to pass a civil service exam and rank in the top three to keep the job.
Shrader told the Common Council on Wednesday that even though the city borrowed the $800,000 to fund capital projects, it nonetheless raided the budget surplus of $500,000 to use for precisely those expenses, while forgetting about the money it borrowed.
Thus, the city’s treasury was depleted, even as taxpayers were forced to pay interest on the borrowed money and still more when the city fell back on emergency borrowing to plug a gap that didn’t really exist.
Worse, the mixup led to layoffs, especially in the fire department. It also resulted in the abolition of city ambulance service.
Wednesday the Council moved the borrowed money into the operating account, where it can be used for paying off the accumulated debt.
There is plenty of blame to go around for this whopper of incompetence, which cost taxpayer dollars and valuable jobs. Among those responsible are White, former Mayor Michael W. Tucker, members of the Common Council and other city officials.
Perhaps worst of all, though, was the conclusion by the Bonadio Group of Amherst that city financial officials were simply conjuring up numbers to make bank reconciliations work. “In several cases, cash was artificially inflated in a fund and did not reflect the actual cash position,” the 2014 Bonadio report said. That’s a staggering conclusion.
No one with a stake in this issue – particularly taxpayers and DiNapoli – should have any confidence that incompetence of this scale and scope has suddenly and magically been fixed. It’s good that Shrader, who has been with the city only since March, is on the job and piecing together the details of this disaster, but he should understand that he needs to make regular reports on the city’s financial management for the foreseeable future. Taxpayers deserve no less.
And DiNapoli should keep his auditors at the ready.