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Outside audit says City of Lockport surplus largely due to emergency borrowing

LOCKPORT – A private firm’s newly released audit of the City of Lockport’s financial records says the books showed that the city had a surplus at the end of last year but that much of it could be attributed to the emergency borrowing that the state allowed the city to undertake.

Randall R. Shepherd, a partner in the Bonadio Group, an Amherst accounting firm, told the Common Council that the general, water, sewer and refuse funds were all in the black but that the last three would have had deficits if it weren’t for the borrowing.

The general fund showed a $2.3 million surplus, but nearly $1.1 million of that came from the borrowing.

There’s no need to think the city’s rolling in dough, Shepherd said. “You’ve got to take your fund balance and allocate it to pay off your deficit financing,” he told the aldermen.

The city issued some $4 million in 10-year bonds during 2014 to pay off accumulated deficits. The Council passed a 2013 budget that appropriated surplus funds that the city didn’t have, because of incorrect financial reports from City Treasurer Michael E. White, and then the Council overspent the budget by more than $1 million.

White was defeated in the November election by Sue A. Mawhiney, and five of the six aldermen either lost at the polls or decided not to run. Mayor Anne E. McCaffrey, who took over in February 2014, survived the anti-incumbent onslaught to win a full four-year term.

During 2014, in order to make ends meet, the city laid off more than a dozen employees, curtailed youth programs, left the city engineer’s job vacant and privatized the Fire Department’s ambulance service.

Outside audits are usually available well before December of the following year, although Shepherd said the work was finished in September. He said it was a hard job to complete the 2014 audit because of the city’s poor record-keeping.

“Persons at the city have no sense of urgency or desire to ensure the accuracy or reliability of the figures,” his report said. Shepherd said his report would have been done sooner if requests for information about 2014 had been answered promptly.

One of the problems that had to be corrected, his report said, was that $249,000 worth of water bill payments made by residents in 2015 were credited as revenue for 2014.

He also said the city allows people to pay property taxes in installments but has no procedure to monitor them continuously. The city also has no cash-collection procedures agreed upon for departments that handle money.

Shepherd said: “It looks to me like they’re making the right decisions. They got (Director of Finance Scott A. Schrader) in place. … They’ve got a financial bench now.”