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Mount Vernon Can Reduce Its Credit Risk If It Stops Operating In Emergency Mode!!

We need a new voice to change course.

That’s progress. I am extremely pleased that Mount Vernon tax payers will have a say in how the $42.63 million dollars of the American Rescue Plan (ARP) will be spent. And that a public session is being planned to receive comment.

Now, the City administration and the City Council should take the next bold step: reverse the vote that allows those ARP funds to circumvent the Office of Comptroller and go to the Board of Water Supply (BWS).

In mid-April 2021, an emergency-mode frenzy, of “finger pointing and firefighting” between the Board of Estimate and Control (BOE&C) and the Office of Comptroller (OC) gave rise to the idea of finding an alternative to the OC to receive ARP funds. The fear and concerns were well-founded given the lack of transparency of the OC.

However, there are several problems with that decision, and the City Council’s vote to sanction it.

Problem #1: The vote violated the City’s charter and New York State Municipal Home Rule, Section 23, because its effects circumvent the elected comptroller. When a local law usurps the Charter, it requires a voter referendum – a ballot initiative. To implement this change, taxpayers needed to vote for a change in the charter, similar to what was done in November 2020.

Conclusion: Because that was not done, it imperils the city legally.

Problem #2: The decision exposes the city to additional financial risks; and increases its credit risk.

a) The designated recipient of the ARP funds - BWS – has been plagued with material weaknesses. According to a 2017 audit, completed in March of 2021, the auditors could not render an opinion on the reliability of the internal financial controls for that year. Further, we are all aware of the alleged misuse of funds in 2018 and 2019 for BWS. Those risks are yet to be quantified because 2018-2020 audits are still open.

b) As of April 20, 2021, the completed 2017 audit was not published on the City’s website, and has not been broadly circulated. On top of that, very little is known or is available about the organizational, reporting structure, and oversight of the BWS. The lack of transparency regarding the functioning of this municipal agency is stunning.

c) Given the public interest here, the public should have been informed about the audit and other available data about the BWS before the crucial City Council vote; which raises other issues: Where’s the accountability?

Conclusion: Items a, b, c, above do not represent a scintilla of risk mitigation. In fact, it appears reckless; it extends the “sky is falling” ememergeny mode of operating; and it further imperils our credit standing with the credit rating community. For those reasons, the City Council and the city administration should reverse the decision.

Problem #3: The city needs emergency funds to plug the holes in the 2021 budget that Comptroller DiNapoli recently characterized as (my term) “Swiss Cheese ”: full of holes and lacked credibility; and it may be more convenient for City officials to bypass the comptroller to have access to the funds. I get that.

Conclusion: -- Quick Fix Never Works. Substituting one plagued agency with another, may allow access to money in 2021, but will block access or blunt our ability to borrow in 2022-2025, because of problems stated in #1 and #2 above.

What Now? Opportunity: This may be counter-intuitive: State Comptroller DiNaopli in his April16, 2021 audit made several recommendations to remedy the budget process. The top recommendation was:

• Work with the Comptroller to determine current fund balance levels, identify all outstanding liabilities and develop a plan to maintain fund balance at a reasonable level.

(This is easier said than done. But the state comptroller’s recommendation reinforces the fact that, as leaders and professionals, the onus is on us to resolve our internal conflicts)

Hence, this is an opportunity for the City Council and the City administration to move beyond politics to develop a range of new alternatives that provides access but do not add additional, unquantified, risks to the City of Mount Vernon to accept the ARP funds.

The writer is a candidate for Comptroller in Mount Vernon and is reachable on .


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