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Derby City Hall (Wikimedia Photo)
DERBY – The city’s new interim financial director said there could be rough seas ahead for Derby’s revenues and expenses.
“I wish I had better news for everyone, but this is where we are,” Brian Hall told members of the Derby Board of Apportionment and Taxation at a meeting on Jan. 23.
Hall was hired as the interim finance director in December 2023. The position had been vacant since August 2022.
Hall pointed out three areas of the current budget (covering July 1, 2023 through June 30, 2024) that he put on a “watch list.” See the video above for more.
The first: employee benefits.
Hall worried the budget underestimates the amount of money needed to pay for medical benefits. The current budget includes about $8 million for benefits. However, Derby actually spent $9 million dollars on benefits in the 2022 – 2023 budget.
Hall called that potential under-funding the budget’s “biggest challenge.”
“It’s probably unlikely your benefits are going to go down by a million dollars,” Hall said.
The city’s sanitation and recycling expenses are up about $54,000 a month, Hall’s second ‘watch list’ item.
That number surprised Mayor Joseph DiMartino’s administration. Click here for a Valley Indy story on the issue.
The new charge for sanitation could cost Derby $600,000 they weren’t expecting to spend.
The third ‘watch list’ item: tax collection rates.
Hall also said the Derby budget has continuously assumed higher tax collections than what’s actually being collected.
“We’ve just been continuously over-budgeting some of our tax collections on property and motor vehicles,” Hall said.
Derby budgets predicted 99 percent of all taxes owed will be collected. Hall said the number is more like 97 percent, which means the city could collect about $1.2 million less than expected.
The budget ‘watch list’ items could, potentially, cause the city to drain whatever money is left in its reserve account, also known as the fund balance.
Also …
Derby officials have a long history of not filing independent audits of their finances with the state on time.
Hall said he is also working to finish the 2022 – 2023 audit.
Hall is also gearing up to start work on next year’s budget (which covers July 1, 2024 to June 30, 2025).
The city’s finances have been a hot-button issue since at least 2019.
In August 2023 the Municipal Finance Advisory Committee (MFAC), a state entity of municipal finance experts, voted to give Derby a “tier one” designation.
One of the reasons cited for the designation was a lack of trust of financial data being supplied by former Mayor Richard Dziekan’s administration who, in turn, blamed former Mayor Anita Dugatto’s administration for budget blunders uncovered when he took office.
The “tier one” designation compels Derby to meet with the committee and provide a five-year financial plan, among other requirements. The next meeting is scheduled for Feb. 14.
Forensic Audit?
It appears that the new DiMartino administration is reconsidering the idea to hire a company for a “forensic audit” of city finances.
Such audits are usually done when criminal activity is suspected. That’s not the case in Derby.
“A definite decision has not been made if a forensic audit should be performed,” the mayor’s office said in an email to The Valley Indy. “They are looking at the cost versus the possible benefits. Currently there is no indication of any fraudulent activity or theft. Many of the city’s challenges over the last few years have more to do with poor budgeting than fraud. Forensic accountants will look for fraud and theft, not why the city has not done a better job of creating budgets.”
Members of the Derby Board of Aldermen & Alderwomen voted in November to look for a forensic auditing company.
DiMartino promised a forensic audit while campaigning last year. Dziekan called for a forensic audit when he was running for mayor in 2019.
