With the town’s Tax Office still under investigation and undergoing a massive audit just weeks before quarterly property tax bills are scheduled to be mailed, the Town Council has voted to borrow $17.2 million via “tax anticipation notes.”
The loan is expected to help the town with cash flow as the Finance Office continues to wade through tax records in an effort to unravel accounting problems that date back years.
While the town – which has not yet passed its 2009 budget – prepares to send out the next round of tax bills to residents, it will have the borrowed cash on hand to pay bills.
“With all that’s going on, the town basically had two options,” said Town Administrator David Drumeler last week. “The first option was to send out estimated tax bills. The second option was to issue tax anticipation notes [the loan]. After discussing our situation with the New Jersey Department of Community Affairs, [Town Chief Financial Officer Margaret Barkala] recommended that we issue tax anticipation notes. And the DCA agrees with that decision.”
Drumeler said $17 million is roughly the amount of money the town gets in property taxes each quarter. August tax bills will now be sent out in September, according to Drumeler.
Although such loans are not unusual, and the town has issued tax anticipation notes in the past, this time around the loan is the result of the brewing problems in the Tax Office.
Four months ago, auditors discovered accounting irregularities in the Tax Office and were unable to balance various accounts. Barkala and auditors from Suplee, Clooney & Co. initially believed the irregularities were the result of a new computer system that had been introduced, but it soon became clear the problems went beyond the computer system. Tax Collector Alan Bartolozzi became the focus of an investigation and, in May, he was suspended with pay from his job. Last month his status changed and he was suspended without pay.
Bartolozzi has not been charged with a crime.
The investigation into the Tax Office has absorbed Barkala’s time and has prevented her from preparing the 2009 budget, which she had been working on.
The $17.2 million loan is the latest fallout in the ongoing investigation of the Tax Office.
This new auditor will be selected by the New Jersey Municipal Excess Liability Joint Insurance Fund, one of the town’s insurers. The MEL will also underwrite the costs of this separate audit.
At the July 7 meeting the council voted unanimously to bring in an independent auditor to lead the investigation after three members of the governing body – Gary Jeffas, Michael Gonnelli, and John Bueckner – questioned whether Barkala and auditors from Suplee, Clooney could adequately lead the investigation since they may have failed to catch problems in the Tax Office in the past.
Although Barkala will help get the new auditor up to speed, it is unclear what role, if any, she will play in the investigation after the new auditor steps in.
It’s also unclear what impact the Tax Collection fiasco will have on the formal introduction of the 2009 budget, which is seven months late. Last year Drumeler and Barkala presented a preliminary budget to the Town Council in mid-July and it was approved a month later. The council will have to work fast to meet the same schedule this year.
“Frankly, we had no idea the Tax Office investigation would continue for as long as it has,” Drumeler said. “Obviously that has not happened and it has thrown our budget schedule off a little bit.”
Unlike some area towns, Secaucus uses the calendar year as its fiscal year.
Although Drumeler has declined to say when the investigation might wrap up or how far back investigators may need to go, he did say, “We’re going to go back until we stop missing money.”
Hudson County Prosecutor Edward DeFazio, whose office is also investigating the matter, said recently that he expects a resolution “in the very near term.”
He declined to state what type of resolution there might be or whether he expects to bring charges.
E-mail E. Assata Wright at email@example.com.