By Jordan Cohen
A combination of revenue shortages stemming from utility delinquencies, costly replacement of a failed software system and other financial issues have left the city’s finances in disarray, and council members openly talking about the possibility of eventual layoffs.
“We might be looking at cutbacks at the end of the year,” said Steve Papalas, council finance chairman, “but we don’t really know how things stand.”
The comments came during an occasionally contentious roundtable meeting Thursday in which Papalas grilled Auditor Charles Nader about the reasons for the city’s rapidly rising red ink.
“Our general fund stands at $1.9 million, but if the year ended right now, the balance would be at zero,” said Nader, who reported major deficits in excess of $2.6 million in the water and sewer departments.
“We’re paying bills [and] I have no revenue coming in,” Nader said.
One reason is the amount owed to the city from utility delinquencies. “I would say they [amount to] $500,000 easy,” said Mayor Ralph Infante. “Most of them come from renters who move without paying.”
The mayor said he is considering a massive water shutoff of everyone whose bills have been delinquent for three months.
“We’re already shutting off 30 to 40 people a day until they pay,” Infante said.
Nader said that without the right software, there is no way for him to determine the actual amount of money the city is owed.
One reason for that inability to gauge city finances is the failure of a costly system leased from a Canadian firm in 2011 that was supposed to integrate utility billing, accounts payable and auditing software.
The Vindicator reported in January the city had spent $225,000 in three years on the software that never fulfilled its promise.
“This was very, very poor planning and poor execution — a waste of money,” said Robert Marino, council president.
State auditors, who are conducting a performance audit of the city’s books, have warned council the city must have software that integrates accounting, utility-bill collections and all other departments.
Council has contracted with CUSI, an Arkansas company, to purchase its software, but Councilman Giovanne Merlo, D-2nd, said the cost to fill all the city’s technology needs could run as high as $550,000 — money the city doesn’t have. Merlo added the figure is an estimate, and the actual figure could be less.
Making matters worse, the engineering firm hired to draft plans for a new sewage-treatment plant has revised its cost upward from the original $30 million to $43 million, further angering council.
“The [Environmental Protection Agency] has mandated that we upgrade, but there’s no way we go to $43 million,” said Councilman Ed McCormick, D-4th.
Papalas said he plans to schedule more meetings to let the public know about the state of the city’s finances.
“This whole software and utility-collection thing is a train wreck,” he said. “When the state auditor’s final report comes out, it’s not going to be nice.”