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Mar 18, 2009 12:32 PMPublication: The Southampton Press

Kabot claims bad record keeping led to financial mess

Mar 18, 2009 12:32 PM

Southampton Town Supervisor Linda Kabot this week said she is confident that the significant discrepancy in the town’s capital budget will be resolved by April, as town financial officials have promised, although the supervisor said the work completed thus far has uncovered a major problem in the town’s record keeping.

Though Ms. Kabot said a full reconciliation report will be presented to the Town Board on Friday, April 3, it seems the main cause of the confusion is in the different methods used for funding capital projects. Town officials have a grasp on those projects financed through the issuance of bonds, Ms. Kabot said, because there is a paper trail for each transaction that has been retraced. But those capital projects funded through direct appropriation—or using cash the town has on hand—have been the sticking point: According to the supervisor, former comptroller Charlene Kagel’s office failed to provide necessary documentation for those direct appropriations.

Ms. Kabot said the town has brought in certified public accountants to uncover and sort through the paperwork to back up those payments.

Ms. Kagel, however, said the supervisor’s take on her record keeping is completely off the mark.

“As usual, she’s incorrect,” Ms. Kagel said, adding that she’s in the process of working with Deputy Supervisor Bill Jones to locate those transactions. “She has no idea what she’s talking about.”

Once projects were approved by the Town Board, the comptroller’s office had the authority to transfer money from non-capital accounts to subsidize capital projects, Ms. Kabot said. However, in the supervisor’s view, that practice left a hole in the books that town officials are trying to fill. “It’s clear the records are not up to snuff,” Ms. Kabot said.

The former comptroller explained that the cost of smaller capital projects, such as a hamlet study that cost around $50,000, are often covered by surplus from general funds. “It’s like paying out of pocket, or from your savings account,” she said. Other projects, such as the construction of a playground, might have been funded through reserves in the park fund, Ms. Kagel explained.

During her tenure as the town comptroller, Ms. Kagel said, she prepared budget entries for every direct appropriation for every capital project. “We wouldn’t move the money until the end of the year,” she said, explaining that she would wait to make sure that a given project was actually completed before allocating the money to pay for it.

“If she has the records, then let her bring them in,” Ms. Kabot responded. “This isn’t about trying to blame anyone—this is about trying to solve the problem.”

In Ms. Kagel’s view, the supervisor’s failure to understand the capital funding process explains the disconnect. “There are spreadsheets in the budget books that substantiate these transactions,” she said.

Ms. Kagel said she is working with Deputy Supervisor Bill Jones to reconcile the budget and that the two are making progress. Ms. Kagel said she has full confidence in the deputy supervisor’s ability to get to the bottom of the capital budget mess.

Ms. Kabot said there are many direct appropriations not in the town ledgers and the movement of cash from general funds to capital accounts cannot be traced. “The report will speak for itself,” she said of the document due in April.

Bonds, which fund the majority of capital projects, are issued after the Town Board approves a project. Ms. Kabot said paper trails exist for those projects, and that it is just a matter of linking the Town Board resolutions authorizing those projects with the appropriate funding sources.

“I’m not trying to paint a rosy picture,” she said. Ms. Kabot said the job is a mammoth undertaking, as there are 175 capital accounts that date as far back as 10 years.

In some cases, bonds were authorized but not issued, or partly issued, and the status on the work on some of the corresponding projects is unknown. Reconciling these issues is what town financial staffers are busy doing now and the April report will reflect that reconciliation, Ms. Kabot said.

The April report will also answer questions Town Board members have been asking since the supervisor first mentioned in January that $19 million in the town’s capital ledgers was unaccounted for, she said. Since then, that amount shrunk to $250,000, according to Ms. Kabot, although the exact figure won’t be known until the final report. “We can’t put out a different number right now,” Ms. Kabot said. “It’s premature. But by April 1, we will have it.” The supervisor did say, however, that she expects the figure will be closer to $250,000.

Town Councilman Chris Nuzzi, who has been pressing for a full reckoning of the capital accounts, said he is expecting a thorough report by April 1. “I’ve been waiting patiently for those results,” he said. “But April 1 is it. Time’s up.”

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Sounds like some of the projects were indeed funded "out of pocket" and were not closed out in the same manner as those which recieved bond or other funding. In all likelyhood nothing is amiss but funding from a surplus or "out of pocket" can be a bit risky in the accounting of the books. After it is all reconciled it may be much ado about nothing and hopefully the process will move forward in a more complete forma so embarrassing incidents as this can be avoided. It only fuels the skeptical view ...more
By North of Highway (280), Westhampton Beach on Mar 18, 09 2:59 PM
Ms. Kabot is quoted in the article as stating that there are 175 capital accounts dating back 10 years, and that reconciliation will take more time. The 19 million dollar question [or $250,000 if you believe Ms. Kabot] is why the heck did no one address this issue before??

Can anyone in the Town explain in detail what they plan to do to avoid this situation again? Anyone, anyone at all? It would make a heck of a campaign platform and November is only around the corner . . . .

By CommonSense (71), Southampton on Mar 18, 09 3:57 PM
I'm more confused than ever. Can't wait until April 3rd to hear Linda's new excuses and blame.
By Lefty46 (56), Westhampton on Mar 18, 09 4:16 PM
The finger pointing and acrimony surrounding this "bookkeeping" problem only proves that Sally Pope was right in asking for a state audit of the Town's books. This incident illustrates the arrogance, paid incompetence, reliance on consultants, systems they don't understand and political use of every problem that constitutes "government" in Town Hall.
By Phanex (83), Southampton on Mar 18, 09 4:24 PM
Boy she always has some crazy excuse or another. Has she once taken responsibility for the many goofs this year? Worst supervisor I can recall in the past twenty years.
By Hampton (50), Westhampton on Mar 18, 09 4:26 PM
I think linda has been going out with bill and getting some idea's?dont you
By pinga (90), hamptonbays on Mar 18, 09 6:06 PM
Bad record keeping? Bad Supervisor! Why this was not recognized last year at this time is a testament to the incompetence of our town supervisor and the person (Richard Blowes) she appointed to oversee the town finances.
By SHNative (554), Southampton on Mar 18, 09 9:27 PM
As someone who has 25 years experience in budget work with the City of New York, New York City Transit, and Health and Hospitals Corporation I can say this didn't happen overnight or in the last year - it is a systematic problem that existed for years. I still think that in the end the amount to be reconciled will be relatively low - but that doesn't really matter - the accounting system needs to be fixed and no more a "wink and and blink smoke and mirrors" - get it done corectly and in a timely ...more
By North of Highway (280), Westhampton Beach on Mar 19, 09 6:16 AM
North of Highway....I am giving Kabot the benefit of the doubt when I stated, "Why was this not recognized last year at this time?" If her assertions are correct, this mess existed last year and she has not chosen to deal with it until other board members demanded that something be done.
Our town government needs to be given back to the people. No more "wink and blink smoke and mirrors" or whatever has been happening in our town hall. Hey, with 25 years of experience, perhaps you can help. ...more
By SHNative (554), Southampton on Mar 19, 09 8:25 AM
I'm paying taxes, what am I buying?
By littleplains (305), olde england on Mar 19, 09 9:25 AM
SHNative - thanks!! I retire in 3 years so maybe I'll start a consultant business! I suspect from what I see of local politics there is too much patronism going on and a reluctance to bring up "unpleasant" (politically damaging) issues. Government is rife with this attitude, and its the taxpayer who eventually pays. That mentality would have to change for real administration to occur and its sad to say Southampton Town government appears to be unwilling to make that change. Ms. Kabot could have ...more
By North of Highway (280), Westhampton Beach on Mar 19, 09 10:48 AM
It will be difficult to get experienced and professional people to serve office in the face of the Republican political machine. For example, the Town Highway Supervisor ignores the interests of the tax payers for the benefit of paving companies. Those paving companies then make political contributions to the Highway Supervisor's political party. The result is that the Town gets stuck with whatever party hack the Republicans march up to the podium, whether or not that hack can add 2 + 2 and come ...more
By CommonSense (71), Southampton on Mar 19, 09 11:53 AM
Well put CommonSense - I understand Ms. Kabot was on various financial committees prior to becoming Town Supervisor, which by association makes her a "co-conspirator in neglect" to the problem until now. This issue can't be anything suddenly discovered - the problem I'm sure was well known within an arcane circle, and ironically I bet the value of the problem will be relatively small and attributed to using operating surpluses to fund small capital projects. If all that is the case and Ms. Kabot ...more
By North of Highway (280), Westhampton Beach on Mar 19, 09 1:23 PM
CommonSense tells us that it will be difficult to get experienced professionals to serve office in face of the old political machine. When we look at the old guard who have been running town hall, I’m sure we can do better.
Anyone interested in running with the only two experienced professionals already in office, Sally Pope and Anna Throne Holst, will be in good company.
By Bob Whyte (48), Hampton Bays on Mar 20, 09 12:41 PM
Mr. Whyte:

Ms. Pope and Ms. Throne Holst would not have been elected but for the fact that they are registered Democrats. Party affiliaton is the first and really only candidate qualification, above intelligence and work ethic, and the Town suffers. If the Democrats sweep Town hall next election, we would just replace one polical machine for another. Take a look at Democratic East Hampton where the Town budget officer is a failed hairdresser, any wonder EH is ten million in debt?

There ...more
By CommonSense (71), Southampton on Mar 20, 09 1:47 PM
Anna Throne-Holst is a registered Blank. It is to the detriment of Southampton Town that one party has had control of the government and that more experienced people have not been hired or run for office, regardless of party.
Are Southampton's finances now following in the footsteps of East Hampton?
By Bob Whyte (48), Hampton Bays on Mar 20, 09 2:30 PM
Common Sense said, "If the Democrats sweep Town hall next election, we would just replace one political machine for another." I respectfully disagree. Look at our Southampton Town GOP. Their grasp over our Town government is complete. Look where they get their money and how they have majorities on every board. Cannusio, Heaney, Kabot or whoever, they have been and WILL be controlled by the Southampton GOP. This is exactly what George Washington warned against because ...more
By SHNative (554), Southampton on Mar 20, 09 8:47 PM
I believe the Supervisor should be able to expect the Comptroller to do their job and keep the books in order. It's not fair to blame Linda Kabot for this mess when clearly poor record keeping by the past administration is to blame. I don't understand how people can point the finger at her when she's the one trying to get things straightened out after years of poor financial management by the last Comptroller. Let Linda and the new Comptroller do their job and balance the books and stop trying ...more
By eagleeye (82), Sag Harbor on Mar 20, 09 9:41 PM
This debacle is not about politics, although it is being used for polital reasons. It is clear that those to whom we entrust the administration of our community must be held to a higher standard. It is time to clean house. If we are to regain any standard of integrity, we must participate more diligently; Ms. Thorne-Holst and Ms. Pope are the evidence for that. Thanks to you both!
By JVB (7), Westhampton on Mar 21, 09 9:45 AM
This will go on and on until Kabot, Blowes and the Comptroller are run out of town. What we have not seen yet is the current books, how are they doing? Does anyone ask anymore about what the balances are? I hear they are in disarray and no one can say what any balances are. The April deadline is fast approaching…..well it’s just another date. It will be postponed until after the election I suppose. But lets take another look at this…how much exactly has Kabot spent to date,……guess we can’t tell ...more
By Hamptonman911 (14), Southampton on Mar 21, 09 6:04 PM
Richard Blowes was told by Heaney not to interfere with the Comptroller's office during his tenure. Linda was not in charge when these problems happened. Now Charlene admits wrongdoing after all her grandstanding? Good luck Brookhaven.....
By lirider (288), Westhampton Beach on Mar 22, 09 8:46 AM
typical politicians: sacrificing financial accountability for political expediency. ... and then finger-pointing till their fingers hurt after the fact.

hopefully this will mobilze the Democrats for the next election. This one-party rule is clearly not working. We need to throw out these bums.
By nicole (96), Hampton Bays on Mar 23, 09 12:55 PM
Anyone who suggests there's little to choose between Republicans and Democrats in Southampton just hasn't been watching Anna Throne-Holst (who isn't a Democrat) and Sally Pope (who is) in action. The record of 2009 demonstrates that they are the only two people on the Town Board who have taken any serious initiative in addressing the financial crisis that was wholly engendered by the Republicans. As far as machines go, while it's true local Democrats have generated some momentum lately, they are ...more
By Turkey Bridge (1979), Quiogue on Mar 24, 09 1:12 PM
All along it was Kagel. She's the one that messed up. Kudos to Kabot for combing through the financial mess and working to sort out the budget.
By ridiculous (214), hampton bays on Mar 25, 09 9:08 AM
I am very happy that Sally Pope called for a full State investigation. The Town has been run slipshod with software that doesn't suit municipal needs and lack of supervision over, of all things, TAXPAYER MONEY! Who sold them that software?

Do you want to bet that the patronage employees of the Town don't get laid off??? No, just the little fella. God help Southampton, because Linda can't.
By Dodger (161), Southampton Village on Mar 26, 09 4:52 PM
Linda Kabot is like the George W. of Southampton, Only W. knew he had no idea how to do his job. The good people that left when she won were replaced with incompetence. Finger pointing is all thats left. Thank God we only have till' January.
By be real (2), Brookhaven on Mar 26, 09 5:59 PM
If, as you claim it was Kagel all along, why didn't King Richard get on this last January?
By Terry (380), Southampton on Mar 30, 09 8:04 PM