Audit: Islandia's tax levies are too high

A state audit of the Village of Islandia has criticized its financial management, saying the size of its operating surplus indicates tax levies on its 3,000 residents are too high.

The audit released Tuesday found:

as a result of consistently underestimating revenue, the village accumulated an unreserved, unappropriated fund balance of about $1.2 million as of Dec. 31, 2009 -- equivalent to 48 percent of its 2010 operating budget;

internal controls over purchasing and claims auditing were not properly designed and not operating effectively;

internal controls over cash management were not adequate.

The audit initially covered the period Jan. 1, 2008 -- Oct. 31, 2009, though it was later extended to Dec. 31, 2009.

State Comptroller Thomas DiNapoli's spokesman, Mark Johnson, said the audit was intended as "constructive criticism" to help Islandia improve financial practices and provide transparency for taxpayers.

Of the unappropriated fund balance, he said: "If you have that much excess funds, we recommend the money be used to benefit taxpayers -- simply put, the figure indicates tax levies are too high."

Mayor Allan Dorman said the fund was "an indication of the village's fiscal health and conservative fiscal policies."

Dorman said in a statement that Islandia has "eliminated the village's $3 million dollar debt and reduced real village taxes by an average of 2% per year over the past three years . . . and completely eliminated its garbage tax, saving village residents an average of $354 per year."

Under state law, the village has 90 days to supply a "corrective action plan."

The audit found village officials do not use competitive bidding when securing professional services, nor do they always execute written contracts. During the audit period, the village paid $419,700 to seven vendors for professional services without soliciting competition. The village could provide no documentation regarding how or why the providers were selected. "The Mayor stated that the selection was based either on personal recommendation or because they were a long time service provider," the audit said.

Officials also haven't developed appropriate procedures for procuring goods and services not covered by competitive bidding rules, resulting in quotations not being solicited for 19 of the 20 claims the audit reviewed.

Officials paid $66,289 for goods and services without seeking competitive quotes.