Ramapo audit shows $8.7 million deficit from 2015
Steve LiebermanRAMAPO - The town's general fund deficit hit $8.7 million at the end of 2015, a financial wound the government continues to try to heal in 2019, a long-awaited audit has disclosed.
The deficit — slightly higher than officials estimated at $8 million to $8.5 million —accumulated under the administration of Supervisor Christopher St. Lawrence. St. Lawrence, supervisor from 2000 to May 2017, is serving a 30-month prison sentence on his May 2017 conviction of securities fraud for misusing the finances of the town and its quasi-governmental Ramapo Local Development Corp.
RAMAPO: 2015 audit shows defict
AUDIT: Ramapo Local Development Corp for 2015
The corruption also led to U.S. Securities and Exchange Commission's penalties, as well as the departure of several high-ranking government officials, including the development corporation's executive director following his guilty plea to financial crimes.
Testimony in St. Lawrence's federal criminal trial focused on how the supervisor orchestrated financial maneuvers to artificially bulk up the general fund to get a better interest rate on municipal bonds in the private sector.
Those maneuvers included conspiring with RLDC chief Aaron Troodler, an assistant town attorney, on a phony land sale, selling off property to pay off debts and misusing funds for the town and agency. St. Lawrence also borrowed money from other government tax funds to hide deficits in the general fund, causing shortfalls that need to be repaid.
Budget revenues also were artificially enhanced and costs lowered to create a better financial picture.
Bond buyers based their investments on the strength of a positive general fund, indicating the municipality's fiscal health. At the time, Ramapo was looking for millions of dollars in bonds to finance a baseball stadium, housing and infrastructure improvements.
"The audit confirms what we have previously announced: in 2015, there was mismanagement that shifted funds between different town accounts which caused a deficit in the Town’s General Fund," Supervisor Michael Specht said in a prepared statement.
"Although the past may continue to haunt us for a bit, we continue to show our progress in the road to recovery – and we have a plan for future progress," Specht said.
He said the town's financial adviser, Capital Market Associates, has established a strategy to restore the general fund balance to an appropriate level.
The town's 2019 budget topping $120 million includes $3.3 million to repay general fund liabilities. The budget also includes pay raises ranging from $17,000 for the trustees to $20,000 for Specht, as well as special employee agreements with perks such as dozens of days off and town cars for top department hears.
Specht said the town has considered obtaining a deficit bond, like the one Rockland County government obtained with state permission, but Ramapo first needed to take several actions, including selling off properties.
The town is selling off several properties and has inventoried the 156 properties bought for an estimated $100 million in bonds under St. Lawrence during his tenure as supervisor from 2000 to 2017.
The Town of Ramapo Assets Review Committee, known as TARC, has recommended in its March report that the town sell the 60-acre Suffern Quarry, appraised at $3 million and obtained for $1 and the 40-acre Hamlets of Ramapo in the Torne Valley, bought for $1.5 million. The town is continuing to study how to use actor Burgess Meredith's vacant and rundown home at 96 Camp Hill Road in Pomona.
The Town and the RLDC have appointed a new independent auditing firm, Albany based BST and Company, to complete the audits for the years 2016 through 2019.
The audit for 2016 is targeted for delivery by May and 2017's audit should be completed by September, Specht said.
Specht and Chief of Staff Mona Montal said the two pending audits for 2016 and 2017 will show an overall deficit increase to about $11 million. But they said the $3.3 million added to reduce the deficit in 2019 will return the figure to $8 million.
They said the auditors expect the 2018 results to show spending and revenues remained within budget.
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Residents and town officials waited several years for the 2015 audit.
The delay, officials said, was because the new auditors needed to redo all the research and analysis. The town's auditor for 2015 and other financial reviews was charged with participating with the town's fraud under St. Lawrence.
Critics didn't ease up on the town, contending how bad the deficit had grown in 2016 and 2017 when St. Lawrence still ran the finances as supervisor and acting as budget overseer.
The fact that the 2015 audit was finally released marked the only good news, said William Weber, a certified public accountant and the Republican who lost the supervisor's race in November 2017 to Specht, a Democrat.
Weber said the audit shows the general fund balance for the year ending Dec. 31, 2014, stood at a positive $1.7 million, before a deficit of $8.7 million arose a year later closing 2015.
"What financial issues can we expect to see in the 2016, 2017, and 2018 audits, knowing full well that Supervisor St. Lawrence was still running the day to day activities of the town up through his conviction in May of 2017," Weber said.
Weber said the town must release those statements as soon as possible so residents can be informed as to the financial position of their town. He said residents need to feel confident that the financial decisions now being made are on solid financial ground.
He noted the town's assets minus its liabilities was a negative $1.65 million as of Dec. 31, 2014, and rose to a negative $30.2 million a year later, Weber said.
"The net position of a town serves as a very useful indicator as to whether the town's financial conditions is improving or getting worse," Weber said.
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Specht said Weber's analysis is off since municipalities are now required to add health care and other long-term costs as a negative for accounting purposes. He said other Rockland municipalities face the same situation.
He said Roth & Co. did the 2015 audit, while auditor, BST, has informed the Town Board that field work for the 2016 audit is substantially complete and the firm is starting field work for 2017.
Specht said the audit for 2015 found a positive balance of $7.3 million in the capital projects fund that can be used for future projects and an overall positive in the combined townwide funds of $208,920. Neither affected the general fund deficit.
The reports have been uploaded to the town and RLDC websites, as well as the Electronic Municipal Market Access site, as required by Municipal Securities Rule-making Board.
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