Thomas DiNapoli

An audit released this morning by the New York state comptroller’s office presents a harsh view regarding financial accountability for the North County Water District.

Thomas DiNapoli’s office, in the report, notes the lack of monitoring for the agency’s financial operations led to a growing negative cash balance totaling more than $5 million as of Dec. 31, 2022. In addition, DiNapoli said the district was experiencing, on average, $150,000 operating deficits each year, and owed the general fund $5.2 million, plus related interest.

“The district board, County Legislature and other county officials did not adopt realistic budgets, routinely monitor the district’s financial operations or take appropriate actions to maintain the district’s fiscal stability,” the report notes. “As such, all county taxpayers have been indirectly funding district operations instead of just the real property owners who benefited from the district’s services.”

County officials, according to the report:

— Overestimated revenues by a total of $1.6 million, an average of $410,000 or 29% each year, from 2019 through 2022.

— Did not enforce collection of water usage billed to Chadwick Bay Intermunicipal Water Works (CBI), resulting in a balance owed of $1.4 million.

— Spent $5.2 million from the general fund for District operations and did not repay the general fund, as required, because the District did not have sufficient funds.

— Did not thoroughly review budget-to-actual reports and did not prepare cash flow analyses.

The comptroller’s office recommendations included:

— The district adopt realistic budgets and develop a plan to collect amounts owed.

— It closely monitor the district’s finances by reviewing budget-to-actual reports and cash flow analyses to prevent further decline in financial condition.

Chautauqua County Executive PJ Wendel and Pierre Chagnon, County Legislature chair, noted they both agreed with the analysis by the comptroller in a response included in the audit and said “it will formalize a Corrective Action Plan to address fiscal stability of the North County Water District.”