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NT: Call for 'fiscal stability committee' shut down

Mon, Aug 17th 2020 03:00 pm

By Michael DePietro

Interim Tribune Editor

At last week’s North Tonawanda Common Council meeting, a proposed resolution from Alderman-at-Large Austin Tylec to establish a “fiscal stability committee,” which he said would be “tasked with developing and implementing the changes recommended by New York state auditors,” was shut down by the council.

A scathing audit released Aug. 7 from New York State Comptroller Thomas DiNapoli said North Tonawanda is in “a vulnerable financial position” due to “the Mayor’s and City Council’s budgeting practices and poor financial management.”

Tylec provided a loose description of the committee, which he said would be comprised of members of the council, the city accountant and possibly members of the public. Tylec said the committee could analyze monthly reports and provide regular updates to the mayor and Common Council. He emphasized the committee would be more about “dialog,” allowing the public to interact and comment on the city’s finances.

“The biggest piece, I think, is creating honesty, transparency and trust with the residents,” Tylec said.

The proposal didn’t get very far, being met with criticism by council members, as well as City of North Tonawanda Accountant Jeffrey Zellner

Council President Eric Zadzilka said he was worried the formation of a new group could delay actions the council needs to take before November when the city’s corrective action plan (CAP) is due to the comptroller. He also said clarity and transparency issues would be resolved now that the city had a fulltime city accountant in Zellner.

“We would be complying with (the audit’s recommendations) with or without the committee. My concern is, would forming a committee, with the timeline that we have of November – I mean, look how long it took (Zellner) to get through some of this stuff. … I think he's got a good handle on it. I think him, coming in monthly to give us these reports, is also what (the state) is asking. And who better to do the day-by-day than Jeff Zellner, our accountant?

“I think that's the communication we were desperately lacking for at least one or two years, off and on, when it came to our previous accountant. We need monthly reports, we need communication, we need discussion. And I think we could have got more from that.”

He also said he feared public perception of the committee would be that city officials would be deferring their responsibilities.

“This sounds all well and good, but we're the elected officials, and on 4th and 10 – I don’t know if I want to punt the ball to another committee. I'd rather dig in and deal with the problems as a group, together, and come up with these answers (since) we’re intimately aware of our situation,” Zadzilka said.

Tylec pressed the point that the committee would be a group effort among board members and the public. He also said he felt the committee could ultimately help acclimate Zellner to his position.

During these discussions, Tylec and Alderman-at-Large Robert Pecoraro engaged in a heated back and forth. Apparently prompted by Tylec’s discussion on council unity, Pecoraro interrupted, saying, “Will you accept your role in our budget process for the last couple of years?” That was seemingly in response to a press release Tylec put out recently where he seemed to distance himself from the council’s financial decisions.

“Are you a leader enough to say, ‘I was here. This audit is a reflection on my leadership abilities on this council?’ ” Pecoraro asked. He later returned to the point during his closing comments.

“We're all leaders up here. If you're not taking responsibility for your actions moving forward, then you have no business being an elected representative,” Pecoraro said. “We all have to pull together. We don't need to be blindsided by press releases where we have no idea what's happening. … We have to work together and we have to be transparent.

“It's very frustrating for me, as an elected representative, when I see something in print that I've had no knowledge of before.”

Tylec ultimately responded by saying that, while the board, as a body, should be held responsible for its involvement in its fiscal mess, he said that he, himself, had voted against certain fiscal measures. In a phone call Friday, Tylec provided examples saying he voted against the city’s entire 2019 budget, as well as parts of the 2020 budget.

To the idea of a committee, Pecoraro went on to add that the committee would imply a lack of faith in the city’s accountant, a sentiment shared elsewhere by Zellner, who said “I feel as though if you put this council in place, there’s no putting trust in the city accountant.”

Later, Zellner said he didn't feel he needed a committee, adding he was “starting to get comfortable with everything and seeing where things are and getting access to different things that I didn't have before.” Elsewhere, he noted that “(The committee) is going to be another cost, whereas I am getting paid to do this. So, if you put a committee together, there's hours you're taking from department heads that would have to be taken out of the budget.”

Ultimately, Mayor Arthur Pappas asked Zellner if the committee was something he felt he needed.

“I don't feel like this is something I need. … I’m fully confident I can do this on my own,” Zellner said.

The resolution died without a vote.

Later, Pappas addressed Zellner and indicated a committee might still be on the table should the accountant request it.

 “If, as time goes on, you feel you need some extra help with this or you need some type of committee – if you need something down the line – please let us know,” Pappas said.

On Wednesday, Tylec posted a message on Facebook lamenting the board’s decision, but noting city officials will have to work together if they wish to fix the city’s current financial state.

“Although my colleagues seemed to have rallied against this solution during last night's meeting, I hope they will put politics aside and take quick, corrective action to ensure our city is on the right track,” Tylec wrote. “I am taking this audit very seriously and I fear if we do not create a unified plan of attack, such as a committee like this, we will lose focus. There are too many pieces of this puzzle and I believe we need to sit down on a regular basis and discuss them separate from usual city business. This is anything but usual. The audit should be seen as a tool for leadership in a community to take accountability and take action to fix our mistakes. I hope the council will reconsider some of their comments last night and vote to create this committee at the upcoming Council meeting.”

Toward the meeting’s end, Zadzilka said he was looking into a resolution to appoint Zellner as the chief budgeting officer for the city. However, there were questions whether that was allowable per the town charter. As such, no action took place.

When asked Thursday about his thoughts on the idea, Pappas said it was simply a way of helping address the auditors concerns, adding, “I don't see any harm in it. I think it could definitely have advantages, because it points out a little bit more clearly who's responsible for what. Right now, sometimes it appears to be a little bit of a gray area and I think the intent is to just try to narrow it down a little bit at least; that's the impression I have right now.”

Elsewhere, Zadzilka announced the council would be reviewing applications for the city’s vacant clerk/treasurer position on Monday. He said candidates will take part in phone interviews with each council member.

Although Tylec had indicated in a prior message to Facebook that he had not been aware a job listing was posted, he didn’t comment on the issue during the meeting.

During her closing comments, 2nd Ward Alderman Donna Braun indicated she would abstain from the interview process as she had submitted her resume for the clerk/treasurer position.

More Audit Responses

In a phone call on Thursday, the city’s former clerk/treasurer, Matthew Parish, offered his rebuttal to the audit’s findings, notably a section that indicated he had “improperly” authorized $2.5 million in restricted cash from reserve funds to pay the city’s February and March obligations earlier this year.

Parish highlighted a resolution from Dec. 6, 2019, which, as written, authorized the city clerk-treasurer “to make temporary loans whenever necessary from various city funds until revenues are received in these loans are repaid.” The resolution was motioned by Tylec, seconded by Braun, and passed unanimously.

Parish said, “That, in itself, designates me, and says that I’m allowed to make that transfer as necessary. Although the auditors came back and advised against doing that, there was nothing illegal and there was absolutely no impropriety on my behalf.”

He went on to say the borrowed funds were repaid once the city’s property tax revenues came in.

He also noted Zellner’s findings that revenue projections were closer than what the state’s audit indicated. While the state’s audit said the city had “overly optimistic” expectations for its 2020 revenues, Zellner said the city’s actual sales tax figures were “$49,000 higher than expected.”

In a phone call Thursday, Pappas said officials were working to implement the recommendations in the audit. He highlighted the audit’s finding that the city wasn’t receiving regular financial updates, which he said made it difficult to manage the city’s finances.

"We certainly want to make every attempt to correct any deficiencies or any practices which are in error,” Pappas said. “... But we also had some very extenuating circumstances with that (city accountant) position. It made it difficult for us, as well as the auditors. … Usually financial guidance comes from the accountant and, absent the accountant, we did not have the information or the knowledge of exactly what was happening.”

However, Pappas went on to say that he and other city officials dispute some of the report's findings.

“Some of the things in there, we kind of question, because NT has paid all its bills and made all its payrolls. And we've had a lot of growth in the city in the past nine or 10 years, and we've maintained all our services. We really haven't had any difficulty with that. So, we are looking cautiously though, at what they suggested and what they recommended. We certainly want to collaborate with (the auditors) and do what needs to be done to make any corrections.

When asked if he, like Zellner, felt the audit was politically motivated, Pappas replied simply, “We have our suspicions.”

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