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State delays tax bills

By Mark E. Vogler Eagle-Tribune Writer Wednesday, March 15, 2000

LAWRENCE -- The state Department of Revenue has refused approval of the city's tax rate for nearly a month because of information the city failed to provide as part of its financial reports -- including completion of an audit for the fiscal year that ended last June 30.

"Certainly the audit is key," said James R. Johnson, director of accounts for the revenue department's Division of Local Services office in Boston. "That's a requirement for the city in order for us to approve the tax rates."

Lawrence is one of five of the state's 351 municipalities that has not received state approval of its property tax rates yet, according to Mr. Johnson. And until the state is satisfied that the city has furnished all the information needed to evaluate its financial situation, third-quarter tax bills will not be mailed out. Mr. Johnson would not say when he expected the delay to end.

Meanwhile, Budget and Finance Director Carl A. Prussing said he expected the city's problems with the revenue department to be resolved soon and predicted that tax bills would be generated within 10 to 15 business days.

He said the city would not face a "crunch time" financial situation and inability to pay its bills "unless we get too far into April." City officials say this is the longest delay in sending out third-quarter tax bills in recent memory. Last year's bills were mailed the first week of March.

"This is an unfortunate, unpopular glitch that doesn't reflect on the city's overall fiscal management," said Mr. Prussing, who has presided over the city's financial affairs for about five years.

Mr. Johnson yesterday said the city had resolved most of the issues he identified in a Feb. 16 memo to Mayor Patricia A. Dowling, which explained why the revenue department could not improve the tax rate.

The principal concerns were:

A $568,000 deficit in the water fund, which was not identified as a deficit in one of the reports.

The city failed to offer details of how it handled a $1.7 million loss in its health insurance trust fund for city employees.

Missing information for about $5 million in appropriations approved by the City Council in January.

A financial report signed by the assessors that did not balance mathematically.

The City Council approved a transfer of $1.8 million from the contingency fund to offset the deficit for health insurance. The city later provided additional information.

But Mr. Johnson said the state is still waiting for the audit report from Sullivan Bille, the city's accounting firm, and additional information.

"I'm sure there has been exchanges of information and telephone calls, at least three times a week, if not daily, between city offices and our offices over the last month," he said.

Mr. Prussing and Acting City Comptroller Sheryl Wright said yesterday they believed the long delay was unavoidable.

"There's nothing we could have done, given the circumstances. We don't have control over people's schedules," said Mr. Prussing, referring to the inability of the firm doing the city's revaluation to complete its work by mid-October. It was more than two months late. He also noted a delay in Sullivan Bille completing the audit, which was due Dec. 1.

The problems were compounded by the city adjusting its financial information to a new computer system, he said.

"We're not in charge of our own destiny here," said Ms. Wright, noting the problems the city encountered with its auditing firm. The retirement of one of the partners was a major reason for the audit's delay. The other partner who has taken over the Lawrence account is already overwhelmed with work and is also planning to take a new job.

Ms. Wright said the state's strict oversight, prompted by a legacy of financial problems dating back years, has added to the challenges facing Lawrence fiscal officers.

"Let's face it -- we are Lawrence. We must dot every 'I' twice. We must cross every 'T' twice. Just because of the circumstances of our funding," she said. "By the time we're through, we will have had more people looking over our books."

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-- (Dee360Degree@aol.com), March 16, 2000