Utica Comptroller Bill Morehouse foresees changes coming with how the city accounts for more than $1.5 million that's available for capital improvements, such as road paving.

The city's Capital Improvement Trust Fund — which accounts for proceeds from the 1996 sale of the city's water system to the Mohawk Valley Water Authority — has been subject to scrutiny in recent weeks, with a Utica lawmaker calling for Morehouse to authorize a forensic audit of the account.

A forensic audit would serve to have the account evaluated in a manner suitable for court or "a governmental hearing," Councilman Joseph Marino wrote in a letter to the comptroller last week. There is about $1.7 million in the fund as of March 31, while the city will collect on annual payments of $480,715 each year until 2036.

The Comptroller's Office did prepare a reconciliation report detailing where and when funds have come and gone over the last five years, but Marino said he believes that is insufficient.

"It shows nothing as to how the money was spent," he said. "It's a component of the audit, but it's certainly not the independent arbiter showing what the money is being used for dollar to dollar."

Morehouse said the only issue he believes auditors would find is a lack of a detailed description with how the money is specifically used. When explaining how water trust fund money has been spent in the last five years, city officials have said a majority of it has been for paying off debt service.

"It was understood that it went to the capital or debt service, but it was never specifically spelled out — that it went to this payment, that payment," he said. "It was just understood that you can use it in the revenue line because it was going to these things. Probably going forward, it should be more specifically spelled out."

Morehouse said the specificity will be addressed in budgets moving forward. That said, Morehouse does not plan to acquiesce to Marino's request.

"As far as the forensic audit goes, if they want to call for one or if they want to call the state Comptroller's Office to come in here, great," he said. "But I'm not paying for a forensic audit. If the council wants to find the money to pay for it or if they want to pay the state, great."

 

Road paving is among the capital improvement purposes for which the fund can be used.

When a plan was proposed by the Common Council — and later approved through a public referendum — to commit $5 million per year to paving streets, it was then proposed that $500,000 could come straight out of the water trust fund on an annual basis.

The program's first year covered seven to eight miles of about 212 miles of roads in the city. Morehouse said the $500,000 came out of the general fund.

"That's the one place where, I think, when they do the budget next year, they've got to be more specific," Morehouse said. "This $750,000, $500,000 to paving and $250,000 to debt service. Just spell it out."

The water trust once was untouchable as the initial plan was to let it grow to $10 million and let the city use the interest payments. That changed in 2005 when laws passed by the Common Council and state Legislature made the money available.

"Should it be more specific? Absolutely," Morehouse said. "Are we doing anything untold? No. This is how it's always been done."

Contact reporter Greg Mason at 315-792-5074 or follow him on Twitter (@OD_Mason).