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Mar 25, 2009 5:01 PMPublication: The Southampton Press

Southampton Town officials: Capital budget is short $4.9 million

Mar 25, 2009 5:01 PM

Asked why she never checked to make sure that Ms. Buday did, in fact, transfer the money once the error was discovered, Ms. Kagel replied only that, at the time, she had every confidence that it would and had been done.

Ms. Kabot said she was deeply troubled by this new information and said Ms. Kagel had a duty to inform the Town Board of the discrepancy as soon as she knew of it.

Ms. Kagel insists that a poor transition involving her staff and the town’s incoming financial team and administration is to blame for the multimillion-dollar mistake. “If there had been a proper transition, as I suggested, this would have never happened,” Ms. Kagel said Tuesday.

Ms. Kabot said that does not exonerate her from failing to reveal the error, which was made two to three years prior to her departure and which Ms. Kagel says she became aware of seven to eight months before she left Southampton.

Mr. Heaney also cited the lack of a adequate transition for the failure to properly adjust the books. “Had there been a proper transition to at least show the incoming people where the reports were to be found, I find it highly improbable that a staffer forgetting to make an entry amount would not have been identified,” Mr. Heaney said.

“Yes, there was a lack of rapport between us during the transition,” Ms. Kabot acknowledged. “But she still had a duty to close out the books. We communicated at least an hour every day during the transition, but that has nothing to do with errors and omissions. This should have been communicated to the full Town Board so a corrective action plan could have been implemented.”

According to Mr. Jones, Ms. Kagel’s knowledge of the $4.9 million snafu as early as summer 2007, and not December 2007, is a significant change. “That’s a whole new ball game,” he said.

While Ms. Kabot said it was “premature” to speculate as to whether the funds were purposely not transferred, she did say further review is warranted. “Clearly, this matter needs to be thoroughly investigated,” she said.

The supervisor said she is also troubled by AVZ’s role in the debacle, arguing that the firm had a duty, not only to the Town Board, but to the state, to reveal that the money was not moved into the capital accounts in 2005 and 2006. Calls to Jeff Davoli, an AVZ partner involved with the town audits, were not returned.

Councilwoman Anna Throne-Holst said it is the Town Board’s duty to ensure such a mistake does not happen again. “This supports the need for the reorganization I have called for,” she said, “and for the establishment of better systems for management and controls.”

Ms. Throne-Holst recently advocated a restructuring of the town’s finanical department modeled, to some extent, after the system in place in Brookhaven where Ms. Kagel serves as commissioner of finance.

Town Councilwoman Nancy Graboski said that while she considered, for now, the matter to be one of “human error,” she, like Ms. Kabot, said more investigation is needed. “I don’t see myself as judge and jury on this, but there certainly needs to be more scrutiny,” she said this week.

In the view of Councilwoman Sally Pope, it’s hard to believe that such an error could have occurred. “There was obviously no supervision from the top,” Ms. Pope said. “The comptroller is supposed to report directly to the supervisor. How can you possibly miss $5 million?”

Ms. Throne-Holst said she was glad to finally be getting to the bottom of the town’s financial mess, but said it was too early to draw any conclusions or comment on both the numbers and process. “We need to move forward and start making real decisions based on real numbers,” she said.

Town Councilman Chris Nuzzi declined to comment on the matter.

Although most capital projects are financed through bonds, some are paid for directly with cash the town actually has on hand. When the money from general funds is directly appropriated for capital projects, the money is transferred by year’s end to cover the costs. In years past, the transfers had been noted earlier in the year, then reconciled with actual cash transfers near the end of the calendar year.

However, according to Ms. Kabot, Ms. Kagel revealed last week what was originally a $6.9 million error in those direct appropriations. In other words, $6.9 million of authorized direct appropriations—cash to be taken from the general fund and other town funds to pay for capital projects—was never actually put into the capital account. Since the revelation, however, the town discovered a $2 million bookkeeping mistake in the town’s favor that lowered that difference to $4.9 million.

Now, Ms. Kabot said, she and other town financial officers are under the gun to correct the imbalance. Unfortunately, there are no easy solutions.

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Really, Bill Jones you are going to pin this on a staffer in a previous administration? When are you all going to take responsibility for this? The Supervisor is the CEO of out town, and for the Deputy supervisor to lay some nebulous blame is unbecoming of the office that you hold.
By SHNative (554), Southampton on Mar 21, 09 8:48 PM
4.9 million is that all, whew I feel better now. the administration should be replaced, or possiably the cuts and layoffs should start with the town stupidviser
By typical (63), southampton on Mar 22, 09 7:17 AM
Both previous posters must be rocket scientists. Did you read the article? It was Charlene and Marie who made the mistake. Do you know them? I do. They were in Skip Heaneys pocket. He would go there and flirt and they'd giggle and get away with obviously a big mistake. Linda is trying to be more than just popular. She's being responsible. Heaney was like all the rest of the failures in business today. Falsely reporting financial records to look good. You idiots.....
By lirider (288), Westhampton Beach on Mar 22, 09 7:50 AM
Blame! Blame! Blame! This sounds too familiar. Take responsibility for fixing the problem. Read Tom Friedman's column in today's NYT. He could be describing Southampton Town administration. Immature is the word he used.
By Viewpoint (26), Southampton on Mar 22, 09 9:37 AM
Looks like we are in the middle of a shell game.
By Bob Whyte (48), Hampton Bays on Mar 22, 09 10:50 AM
Bring back The Southampton Party!
By Doug Penny (64), Lexington, Virginia on Mar 22, 09 11:50 AM
In view of other problems reported in the past few months its hard to believe that this recent discovery was just a human mistake. Its really time to clean house at Town Hall.
By westhamptonboy (227), Westhampton on Mar 22, 09 2:29 PM
ENOUGH ALREADY with the blame game. Get to the final bottom of the problem, recognize how it happened, and provide a solution, provide transparency and move on!
By North Sea Citizen (568), North Sea on Mar 23, 09 6:33 AM
Sally Pope looks like a hero-thanks for exposing these problems.
By Lefty46 (56), Westhampton on Mar 23, 09 7:22 AM
This appears to be a ledger error. The money is not missing, it was not moved from one account to another which apparently nobody noticed at Town Hall in the past two years. Not noticing that there is an extra $4.9 million in the main account? This does not give me much faith in Kabots abilities.
ps stopped into the Supervisors office at 9 a.m. the other day--the office opens at 8:30--just one of her five staff members was in yet. Does she not expect them to work a full day like the rest of ...more
By Hampton (50), Westhampton on Mar 23, 09 8:22 AM
If we really want to know what's going on with the books, maybe it's time for an audit from an outside source. It's sad to say, but I don't feel comfortable trusting anyone in the past or current administration to oversee the town's finances. I'm sorry, but you don't just "overlook" accounting errors of 4.9 million dollars. I'm afraid this might be a much deeper problem than we're being lead to believe. get ready for your tax increase people.
By lol@hb (20), hampton bays on Mar 23, 09 9:45 AM
Ms. Kabot, the buck stops with you.
By dagdavid (646), southampton on Mar 23, 09 10:24 AM
Our supervisor spent money that we did not have. She authorized renovations in town hall. She made the decision to move the justice court to Hampton Bays rather than the receiver of taxes, increasing that project by millions and had a new slate roof put on town hall. She is raising our taxes by the maximum….Now what?
By SHNative (554), Southampton on Mar 23, 09 8:57 PM
Linda has come across as a complete fool over this. Does she realize how bad she has made her public image? One of her advisors should tell her to clam up and get to work. She has been on a crusade against Charlene Kagel since Kagel supported Skip in the election. Remember the infamous You Tube video Linda made bashing each staff member who openly supported Heaney?
Linda, for once, just be quiet, do the work you were elected to do and stop trying to make those who preceded you look bad. It's ...more
By Hampton (50), Westhampton on Mar 25, 09 9:13 AM
I must agree with most of the comments - especially the point about keeping quiet about everything until it is all straightened out. The story has changes 3 or 4 times now and its always someones elses' fault. Just get to the bottom of it, fix it and move on!
By justask (1), Hampton Bays on Mar 26, 09 12:01 PM
AVZ (the auditor) shares part of the responsibility - what is the Town paying them for? (remember Arthur Andersen?). I think the voices here who are calling for a "cease fire" in the numbers game have the right idea; let's cease the finger pointing and solve the problem. There doesn't seem to anything criminal here - just slopiness. Many people may have other issues to call Ms Kabot on but this one seems to be inherited; lets get it solved.
By North of Highway (280), Westhampton Beach on Mar 26, 09 3:23 PM
Kabot inherited this N of Hwy? Where have you been. Kabot has been in Town Hall for well over a decade. First as Vinces Gal Friday, then as a Councilwoman and now Supervisor herself. Saying she inherited the problem makes her look even dumber than she is. Or was that the point of your comment?
By G (342), Southampton on Mar 26, 09 4:32 PM
I understand she's been on finance committees and such in the past and therefore - shame on her - the story broke into the public on her watch whether she knew about it or not.. However, having spent the last 22 years in municipal finance in a number of positions I can tell you sloppy accounting like this can go on for years without anyone addressing it as those in power do not like bad news, regardless of who is to blame. Budget accounting can be a very arcane business and without audits many issues ...more
By North of Highway (280), Westhampton Beach on Mar 27, 09 3:38 PM
Any chance theat King Richard will assume ANY responsibility as a former Comptroller, and "have to keep my fingers in everything" guy? Maybe he was busy spending 4.5 mil on the Flanders Senior Center. 4.5 mil? Yep thats right folks, just drive by and see what you can do for 4.5mil!!
By Terry (380), Southampton on Mar 27, 09 6:45 PM
By sjd (420), Westhampton Beach on Mar 30, 09 11:18 AM