Fiscal issues put Amsterdam’s ‘credibility on the line’
Grant funds are frozen, credit rating withdrawn
AMSTERDAM Amsterdam’s delays in conducting a basic year-end audit of its own finances is stalling hundreds of thousands of dollars of work and taking a toll on economic development, the environment and potentially property taxes.
An audit of the city’s fiscal status is supposed to be turned in to the state Comptroller’s Office by the end of the city’s fiscal year, June 30.
In its absence, the federal government froze grant funding already earmarked for specific work, leaving the city’s Urban Renewal Agency scrambling for an alternate source.
Amsterdam URA Director Nick Zabawski said there are six federal grants worth roughly $2 million being held up at this point.
“Credibility of the city, as well as this agency, is on the line here,” he said.
Work is under way to improve housing in the Reid Street neighborhood under a $400,000 grant from the federal Department of Housing and Urban Development. The agency can’t draw off the federal money, so contractors doing the work are being paid out of the agency’s revolving loan fund.
That fund is supposed to be directed toward helping businesses looking to create some economic activity and hire people in the depressed city.
About $600,000 in grant-funded work to separate the city’s storm drains from its sanitary sewer should have already begun. But Zabawski said the project, focusing on the portions of the aged drainage system on James and DeGraff streets and other sites in the city, is now being put off until 2014 because there isn’t enough money in the revolving loan fund to pay for it.
It’s unlikely the city could borrow its way out of the situation. In June, Amsterdam was among 28 municipalities nationwide that had their ratings placed under review by Moody’s Investors Service, which added a label of “direction uncertain” because analysts couldn’t gather enough information to rate the city’s creditworthiness.
Amsterdam and four of those other municipalities didn’t get enough information to Moody’s analysts, so their credit ratings were withdrawn altogether.
“As a result of insufficient or otherwise inadequate information, we are unable to provide investors with an informed assessment of current credit quality,” Moody’s announced in a July 31 news release.
Poor credit ratings lead to higher interest rates — and higher costs to local taxpayers — when municipalities borrow money to fix roads or buy equipment.
The city’s finances have been under review by auditors from the state Comptroller’s Office, according to 4th Ward Alderman David Dybas.
He said they are meeting with city officials this week to go over the results.
Dybas said a draft of the report he reviewed revealed three “ins” he considers indicators of the status of the city’s books: “inaccurate, inadequate and incomplete.”
“I have read many, many audit reports. I have in my day written a few, trained a few auditors, taught accounting, edited a few audit reports. The worst one I have ever read was fantastic compared to this one,” he said.
The city’s Finance Department is currently being run without a controller, following the death of Ron Wierzbicki in December 2012. A deputy controller hired after Wierzbicki’s death, David J. Mitchell, is currently in charge of the city’s finances.
When Wierzbicki was elected in 2011, the city’s audit for 2010 was already several months late. The delays continued.
He blamed his predecessor, Heather Reynicke, for leaving him poor data to work with and said there were later problems with computer software.
Amsterdam Mayor Ann Thane said Mitchell, who was hired earlier this year, is expecting to complete the city's audit report and get it to the state by the end of this month.
She said the fiscal problems stem from a combination of issues.
Reynicke left the office in 2011, a time when the city’s accounting system was being switched to a different computer program. Then there were problems converting existing data with the new software.
“It clearly illustrates how dysfunctional it is to have elected people in a position of managing six funds and a $28 million budget,” Thane said.
Currently, the only requirements to be elected controller in Amsterdam is to be older than 17 and be a resident of the city.
The city offered voters a change during a referendum this summer — a controller appointed by the council rather than elected by the public.
Voters rejected the charter change 377-196.
Next month, voters will get to pick from two candidates to fill the remaining two years of Wierzbicki’s term: Democrat Irene Collins and Republican Matthew Agresta, who lost to Wierzbicki in 2011.