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Office of the State Comptroller - Local Government & School Accountability
Taxpayers' Guide to State and Local Audits

City of Newburgh – Council Oversight and Revenue Enhancement Opportunities (2012M-77)


Released: October 25, 2012 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was to examine the City’s financial operations for the period January 1, 2010, to June 21, 2011.

Background

The City of Newburgh is located in Orange County and has a population of about 29,000. The City is governed by the City Council, which is made up of the Mayor and four other elected members. Budgeted general fund appropriations for the fiscal years 2010 and 2011 were $43 million and $39 million, respectively. In recent years the City has experienced fiscal stress which has resulted in the City issuing deficit financing.

Key Findings

  • As a result of the City’s poor financial records, the City’s independent auditor (CPA) issued a qualified opinion on the City’s 2007 financial statements, and the audit of the 2008 and 2009 financial statements were not completed until the middle of 2010.
  • The poor condition of the City’s financial records also led to the Council and City officials appropriating $5.5 million of unavailable fund balance to balance the 2010 budget. This action resulted in the 2010 general fund deficit, the subsequent real property tax increase of 41 percent in the 2011 budget, and the authorization for the City to issue debt up to a maximum of $15 million to liquidate the 2010 reported deficits. We also estimate that the City has paid more than $570,000 in interest charges for borrowings that they did not need.
  • By changing to an annual fee for non-owner occupied rental properties, the City could generate up to $930,000 in additional revenue to cover the cost of monitoring rental properties and shift the burden to those property owners, while reducing the costs to the general tax base.

Key Recommendations

  • Require the City Manager and Comptroller to maintain complete, accurate, and reliable financial records and prepare periodic and timely reports for the Council to use to assess the City’s financial position and make informed financial decisions.
  • Continue to closely monitor financial operations and take appropriate actions to maintain the City’s financial stability.
  • Establish an ordinance that equitably covers the costs the City incurs to monitor non-owner occupied rental properties.

Local Government and School Accountability Contact Information:

Phone: (518) 474-4037; Email: localgov@osc.state.ny.us
Address: Office of the State Comptroller, Division of Local Government and School Accountability
110 State Street, 12th Floor; Albany, NY 12236