A scathing preliminary state audit released Wednesday largely blames much of Hollywood’s recent financial problems on city officials for failing to use available funds to bridge budget shortfalls, neglecting to plan for rising pension costs, and misusing Community Redevelopment Agency dollars.
The tentative 25-page report by Florida’s Auditor General found that city officials neglected to consider using $22.7 million in available funds that could have prevented a declaration of financial urgency in 2011. Instead, the city slashed employee salaries and raised taxes and fees for residents.
The money available mentioned in the report was left over from the water and sewer utility fund and could have been used to help bridge a budget shortfall, state auditors said in the report.
The auditors also pointed out that Hollywood officials should have done a better job of anticipating the city’s growing pension costs, and planning for them.
City leaders have 30 days to provide written explanations for the 13 findings cited in the audit report. But they largely dismissed the findings, and said the report “covered a snapshot in time where we had financial problems,” said City spokeswoman Raelin Storey.
“The report validates the city’s actions brought on by rising pension costs,” Storey said, adding that the city has since implemented changes, such as hiring a new finance director. “Times have changed. We have since addressed a lot of the issues and are looking closely at the suggestions.”
This year, the city has a balanced budget with about $15 million in reserve and no plans for employee cuts or increases for residents.
Storey echoed the report’s statement that the water and sewer funds wouldn’t have solved the city’s financial problems in 2011. She said the auditors’ criticisms that city officials should have anticipated and planned for growing costs is something the city has already addressed.
Marilyn Rosetti, an audit manager with the state’s auditor general’s office, said the final report will include the auditor general’s findings — which may be modified — and the city’s response.
In October, the state’s Joint Legislative Auditing Committee, at the request of state Sen. Eleanor Sobel, approved an audit of the city’s finances.
The request came not long after the city declared financial urgency and slashed employee salaries by at least 12.5 percent.
In fiscal year 2011-2012, the city faced a $38 million budget deficit and raised taxes and fees by more than 11 percent. The city also put a referendum in front of the voters to slash pension benefits for employees. The voters approved it.
For months, staff from the auditor general’s office had been at City Hall looking at documents and talking to officials.
In the report, auditors also criticized city officials for failing to adopt policies that would have ensured money was available to fund pension benefits promised to employees, and that pay increases and pension benefits negotiated by employee unions and approved by city commissioners likely were unsustainable over the long run.
Jeff Marano, president of the Broward chapter of the Police Benevolent Association, said the audit report confirms the police union’s concerns about the city. The PBA sued the city in 2011 for unfair labor practices, and Marano said the suit is currently on appeal.
“We have contended for the last two years that the city has mismanaged their finances, which had led to the financial urgency,’’ he said after reading the report. “This only verified our position.’’
Mayor Peter Bober said Wednesday the city will be “challenging each of the findings.”
“We know the investigation was politically motivated because the union admitted to instigating the investigation,” said Bober, who called the report findings “old news.”
“It’s not a secret that Hollywood has gone through some issues,” he said. “But we have changed the administration.”
State auditors also looked at the city’s CRA, saying the agency failed to follow state law for certain expenses, including $1.5 million spent on community policing and $187,000 for an “enhanced maintenance’’ program. Auditors recommended the city repay the CRA those moneys.
The report also slams the CRA for spending $1.8 million in employee salaries and benefits, but doing a poor job of tracking how much time each employee worked and how much effort was dedicated to the CRA districts for the beach and downtown.
CRA Director Jorge Camejo said Wednesday he is “confident” he will be able to address each issue.
“We are in the process of preparing our official response,” he said. “I am aware of the issues and I don’t see anything we haven’t already addressed or have plans to address in the near future.”