Babylon Town, the subject of a state audit last year that faulted its leadership for financial mismanagement, says it has moved to close operating deficits in its general fund and revise estimates of future revenue as part of an effort to adopt most of the recommendations for change made by the New York State comptroller.

Recommendations the town has already acted on include higher taxes to close deficits, and revising estimates of revenue from items such as mortgage taxes. Still to come are data and password security policies the town said will be implemented by August, a data breach notification policy to be implemented by December, and a disaster recovery plan due by December 2015.

Additionally, officials say, a new financial software system will be phased in later this year to better track and allocate administrative charges the town bills to its commercial and residential garbage funds.

Brian Butry, a state comptroller's spokesman, wrote in an email that his office is reviewing the town's efforts to meet the state's concerns raised in last year's audit. But he said it is "up to the town to take action. We certainly reserve the right to conduct a follow-up audit to determine if our recommendations have been implemented."

The November audit report said that town officials violated proper procedures with a series of loans between 2008 and 2011 totaling nearly $28 million from the town's residential garbage fund that were used to purchase property for revitalization in Wyandanch.

The board did not properly authorize those loans, the audit found; municipal law was violated because the loans were not repaid by the end of each fiscal year and no interest was paid on them.

The audit also found that the town overestimated revenue from 2008 to 2011, which contributed to $8.9 million in operating deficits and also to fund balances that diminished from a $6.1 million surplus to a $10.5 million deficit.

Suffolk County Executive Steve Bellone was town supervisor during a portion of the period covered by the audit.

Town officials said most of the items in the audit have been implemented.

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"We look forward to continuing to work with your staff to ensure a smooth-operating, transparent financial operation," Town Supervisor Rich Schaffer wrote in a letter to the comptroller.

Schaffer called the rule that mandates repayment of loans by the end of each fiscal year "outdated" and said the town needed more flexibility to respond to crises like superstorm Sandy.

Faced with storms or other incidents of that magnitude, Schaffer said in an interview, "We're needing to use that money, use our surplus, to pay our bills because we know FEMA is not going to reimburse us for a couple of years."

Babylon Town GOP chairman Anthony Pancella said this week that some of the problems identified in the initial audit arose because of a lack of effective opposition on the Democrat-controlled town board, which he called "an unhealthy situation."

TOWN PROMISES REFORMS

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Last November, the Town of Babylon was criticized by the New York State comptroller's office for a number of financial shortcomings in town government. The town has now told the state it will make changes, including:

Raising revenues to close deficits

Revising estimates of revenues from such sources as mortgage taxes

Improving password security policies on key data by August

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Create a disaster recovery plan by December 2015.

Implement a new financial software system this year to better track administrative charges related to garbage funds

Source: Town of Babylon