letter to the editor by mike russo 2/2/2013

Letter to the Editor of the New Paltz Times:  Mike Russo 2/2/2013

Many in the public may have the impression that consolidation will deliver large budgetary savings and lower taxes for everyone, but in fact, these savings claims are unsubstantiated.

Regarding the Fiscal Consolidation Committee’s report, several board members in the last few meetings have made confusing or misleading comments that the report’s numbers were audited figures. For example, at the Jan 30^th meeting, Councilman Barry stated “I don’t think we need to go back and re-audit what’s been audited.” It’s true that the Committee worked from numbers drawn from the 2011 Town and Village audited reports. But in no way does this make their estimates audited figures as well. The Committee examined the various expense lines of both town and village and estimated possible savings that could arise from consolidation. No outside accounting firm reviewed these figures of estimated savings or the methods of such estimations.  The Committee’s numbers are unaudited claims of savings.

Since the report was released on January 9, 2013, a number of people have examined the Fiscal Committee’s estimates of savings and identified a multitude of flaws and inaccuracies with their numbers. Approximately 18%of the total savings, that is $300,000, is related to the Police expense line, and has nothing to do with consolidation. A lot of scrutiny has been directed to the claimed DPW savings of $520,077, which is 32% of the total savings. Cuts already made in DPW lines in the Town 2013 budget are being counted as consolidation savings. When reductions in the Town 2013 budget were announced last year, credit was taken for the board’s good work in reducing costs. Consolidation was not mentioned. At the end of the December 3, 2012 Committee meeting, the Town Supervisor stated that whether or not consolidation takes place, "I can say that the reductions that are reflected in here from the town - those reductions are here to stay."  Yet more recently, the Supervisor has said that many of those reductions were made in anticipation of consolidation. From viewing discussions of the DPW savings line in Committee meeting videos, and comments from others, including those who had follow-up conversations with the Village DPW and Town Highway Superintendents, my sense is that the Committee’s claimed DPW savings from consolidation is unrealistic high. A thorough facilities analysis is lacking so the Committee’s suggestion that Town Hall could be eliminated is not supported.  As well, an arithmetic error in the Committee’s spreadsheet creates an overall discrepancy of about $200,000 in claimed DPW savings. Most of the other savings estimates in the report have also been critically questioned.

There are several other problems here. One is that the Fiscal Consolidation Committee’s claim of large savings and lowered taxes for all contradicts the findings of the 2011 Fairweather study. That study stated that “there is little if any true duplication of services in the Town and Village” and “… restructuring through consolidation is not an effective means for overall reduction of the cost of local government.”  Two, the Committee is comprised of consolidation advocates, and the element of bias appears in their discussions – this necessitates that their report be verified by an objective party. Three, the Committee’s claim of significant overall savings has been reprised by the press, and thereby to the public, at least since November 2012. For example, this paper on 11/9/2012 quoted Trustee Rhoads as stating “We have come up with right now a $1.4 million savings should the village and town merge.”  It is critical to determine if the public has been misinformed, and if so, then the facts in the public domain need to be corrected. Four, some board members now want to move away from the Committee’s report altogether and hire a law firm to produce new financial estimates. Choosing a law firm instead of an accounting firm is unwise. In addition, the proposed law firm has had discussions with local elected officials about being hired to guide the community through the consolidation process. This would be the wrong approach and may represent a conflict for that law firm.

To clear the air about these projected savings, we must engage an accounting firm to audit the Committee’s report. The firm should have done no prior work for the Town or Village and should have no other conflicts of interest. The auditors should be provided with the Committee’s work documents and all of the critical analysis that the public has generated since the report was released. CPAs work with a fairly defined set of rules and principles in performing analysis. CPAs often employ several different estimation approaches, and use these complementary approaches to close in on a probable result. We need accounting, not legal, analysis; this is a job for an accounting firm, not a law firm.