Editorial: Babylon audit a lesson for Bellone and Suffolk

Suffolk County Executive Steve Bellone. Suffolk County Executive Steve Bellone. Photo Credit: Howard Schnapp

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The state comptroller's recent audit of the Town of Babylon's finances is disquieting -- both for the pattern of action it describes in the town from 2008 into 2012, and for the eerie echo of those actions over the past two years in Suffolk County government.

The common thread is Steve Bellone, who was the Babylon supervisor for most of the audit period and is the current Suffolk County executive.

The audit said the town produced budgets that were not structurally sound, that it consistently overestimated revenue, that it made inter-fund transfers that violated state law in several ways, and that it did not adhere to generally accepted accounting principles. Similar criticisms have been leveled at Bellone and his administration at the county level, too. Part of the town's defense is an ends-justify-the-means argument: Babylon officials were responding to a difficult financial situation that required long-term planning, and through the moves called into question by the audit they now have righted the township. But in a society that is governed by the rule of law, it's never good to violate process -- once you start, where do you stop?

Bellone would be wise to consider the audit as a warning. The goals might be admirable, but you can't disregard rules to get there. The result is that the greater good that is the objective gets lost in the pillaging of process.

Consider one of the audit's principal pieces of analysis. Babylon used a series of 17 transfers from the residential garbage district fund to the town's general fund to purchase property for the town's Wyandanch Rising revitalization project. The total was nearly $28 million.

State law says such transfers must be approved by town board resolution, must be repaid by the end of the fiscal year, and that interest must be charged. Those conditions were not met, although town officials say the board approved all bonding for the properties and repaid all transfers -- with interest -- by this year.

What gets lost in the controversy is that the project itself is admirable, the properties clearly had to be bought to make it work, the town was able to purchase them before a sewer line was installed, which would have only increased their value, and that paying via these transfers and delaying the bonding saved taxpayers more than $3 million.

Here's the current county corollary: the recent $33-million raid on Suffolk's sewer rate-stabilization fund. That, too, had a noble goal: to fill a budget hole for 2014 without raising taxes or bonding. But that also was a violation -- of a compact with voters, who via referendum set up the fund for a far different purpose. And though the Babylon interfund transfer appears to have been resolved with minimal consequence for taxpayers, the promise to repay the county sewer fund down the line -- or more quickly, depending on the outcome of a lawsuit challenging a previous similar fund grab -- is far more tenuous.

Process matters -- whether it's the sewer fund or the failure to provide proper legal notice in the attempted merger of the county treasurer and comptroller offices, or the failure to follow competitive bidding procedures in the sale of the Foley nursing home. The town audit found no malfeasance or criminal conduct. But its recommendations should be studied -- not only by Babylon officials, who must issue a corrective plan of action, but by Bellone and his administration. They inherited problems at the county level far more serious than those that had plagued Babylon, with consequences far more severe if they mess up.

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