$19 million in Southampton Town capital budget unaccounted for

Some $19 million is unaccounted for in the Southampton Town $35 million capital funds budget, and while town officials scramble to resolve the discrepancy, some Town Board members are upset about not being informed about the miscalculation.

The revelation came to light during a routine discussion Friday regarding $1.1 million in proposed improvements to the Poxabogue Golf Course, a joint venture between the towns of Southampton and East Hampton.

In explaining the inconsistencies in the capital ledger brought up by Deputy Supervisor Richard Blowes, Southampton Town Supervisor Linda Kabot mentioned that the $35 million posted in the town’s capital accounts does not match the $16 million of actual cash the town has in the bank.

“That’s news to me,” Town Councilwoman Anna Throne-Holst replied. “How did that happen?”

Referring to the discrepancy in the budget, Ms. Kabot said Friday night, following the work session, that “Richard brought something up in open session that wasn’t on the agenda.” She added that some board members were upset that the capital figures were not “neat and tidy.”

What’s troublesome to Town Councilman Chris Nuzzi is that he was not informed about the budget’s inconsistencies until Friday’s work session focusing on the golf course improvements. “We hear about the discrepancies for the first time as an aside,” he said. “What’s alarming is that we’re just finding out about this while we’re being asked to allocate even more money.”

The incongruity in the capital budget precludes the Town Board from making any decisions on any future capital projects, Mr. Nuzzi said. “In light of the current economic circumstances, before we even contemplate spending additional dollars, we need to account for every capital project and every dollar spent, down to the penny,” he said.

Ms. Throne-Holst, who was skeptical about funding the Poxabogue project, said she could not make a decision on the golf course, or any other capital project, until she had a thorough accounting of the town’s entire capital picture.

“I need real numbers,” the councilwoman said, who added that she’s been asking for such a report for some time. “I’ve been kicking and screaming about this for almost six months now.”

The problem, in Mr. Nuzzi’s view, is that town officials do not have a bead on the status of the town’s capital projects. “Our priority should be to find out what projects have been funded, where they are, what’s left over, what’s been completed, what’s been scrapped,” he said.

But Ms. Kabot said the board did know about the trouble in the capital budget, just not the seriousness of it. The supervisor said she and Mr. Blowes are at work trying to get to the bottom of the numbers in order to present a more accurate picture to the board.

Mr. Blowes said he regrets bringing up a specific number and said the figure may or may not be $19 million. “I should have used general terms,” he said. However, Mr. Blowes acknowledged that the discrepancy was in the “significant millions.”

Ms. Kabot blamed “bad record-keeping” on the part of the previous town comptroller, Charlene Kagel, for the irregularity. “This has been a quandary for six years now,” Ms. Kabot said.

Mr. Nuzzi, however, pointed to a rough transition between Ms. Kagel and her successor as comptroller, Steve Brautigam, and said he suggested having both teams work together during the switch. “Apparently, that suggestion was never taken seriously,” Mr. Nuzzi said.

Ms. Kagel said the problem did not exist during her tenure and maintained that the dilemma over the capital funds stems directly from the poor transition. According to the former comptroller, Mr. Blowes presented a transition plan at a meeting in January 2008. “I voiced my opinion against that plan,” she said, adding that she was concerned about the fact that Mr. Blowes was not a comptroller. “It’s standard practice that the comptroller come up with a transition plan.”

Prior to becoming town comptroller for Southampton in 2003, Ms. Kagel served as deputy to former town comptroller Craig Furer.

“I was brought in as deputy comptroller in 2000,” she said. “And Craig had been there for 23 years. I had three years of knowledge before I became comptroller.” Ms. Kagel said that 26-year knowledge base was lost due to the absence of an adequate transition.

Mr. Blowes agreed that the transition was lacking, but cited the fact that Ms. Kagel took two of her staffers with her when she left to become Brookhaven Town’s finance commissioner. “There were very few people left who had been working in that department,” Mr. Blowes said. “But it’s irrelevant now. We are working through the process. Facts are facts, budgets are budgets, and records are records.”

Mr. Blowes told the board on Friday that he was working on a report that would reflect real numbers for the capital budget and that he would be able to present those numbers to the board members in April. “I should be able to get that information to you on any capital project, what has been spent and the source of funding,” Mr. Blowes said.

But Mr. Nuzzi said that’s not good enough. “We should have been made aware of this a year ago, and now we’re being told we need another three months to resolve it? It’s alarming we were not advised of this earlier.”

Mr. Blowes said crafting the report is arduous work and involves re-installing the financial software that will break each capital project down individually.

“We are implementing strategies to correct inequities and problems in the past. Each project will have its own balance sheet.” According to Mr. Blowes, the prior administration lumped all of the capital projects into one account. “When you do that, you have no idea about the authorization to borrow. When you combine all your money into one pot you don’t know who is short until the total pot of money is depleted.”

But Ms. Kagel said under her watch there was always a separate line for each project. “When I left, there was an appropriation line for each project. I’m required by the IRS to track each one,” she said.

In fact, Ms. Kagel claims the spreadsheets that could solve the capital fund discrepancy are currently in the comptroller’s office. Ms. Kagel said those files are on the computers but because of the lack of transition, the comptroller’s office does know how to access them.

“There is one spreadsheet that tracks each project, the amount bonded, the amount spent and the amount available,” she said. “And one that shows each bond resolution adopted by the Town Board—what’s issued in long-term bonds and what’s been authorized and what’s been issued and what’s available to be issued. All they have to do is put in the 2008 activity on the spreadsheet and they would have up-to-date numbers.”

The supervisor said later that Mr. Blowes opened the door to a heated discussion by bringing up the capital budget during Friday’s work session.

“Richard felt like he was being questioned by Anna, like he was being blamed for the capital budget,” Ms. Kabot said. “We knew back in March there were troubles with the capital budget, and we’re trying to reconcile them.”

The supervisor said there would be another work session when an accurate capital budget report is complete to provide board members with a full picture of where the town stands with its capital program.

“I don’t hide anything from board members or the public,” Ms. Kabot said.

Despite the unexpected argument over the capital budget, Mr. Blowes told the board that it was a smart investment to fund the improvements to Poxabogue as the golf course is a revenue generator for the town. The $1.1 million of proposed enhancements include relocating the tee-line and creating a pitching and putting facility for teaching purposes. Increased opportunities for teaching golf, Mr. Blowes said, would bring in even more money.

But Ms. Throne-Holst said she has concerns that a worsening economy might prevent people from taking golf lessons.

“There’s no telling what this summer will be like,” Ms. Throne-Holst said. “And until we have clear, accurate figures, we are in no position to make such big decisions with taxpayer dollars.”

According to Mr. Blowes, the town currently has $500,000 in the Poxabogue reserve account.

Mr. Nuzzi said he shares Ms. Throne-Holst’s concerns about projecting revenue in today’s economy.

“Here we are, going into a very difficult spring and summer, and we’re being asked to bond $1.1 million for a golf course,” he said. “I would love to be able to do that, but I’m a little reluctant because I am not sure that incoming revenues will cover the costs. I just don’t have the substantial data that I need to be confident in funding more capital projects right now.”