A state audit criticizing Hollywood for declaring financial urgency in 2011 was full of mistakes and presumptions, according to a response submitted by city leaders this week.
“Obviously bad data in equals bad conclusions out,” said City Attorney Jeff Sheffel.
The city filed its 27-page response, plus graphics, late Wednesday night, just hours before the state’s deadline.
The city’s response highlighted several areas where it disagreed with the state auditor.
“We wanted to emphasize you can’t draw a conclusion whether some operational parameter is running correctly if you don’t have the right facts,” Sheffel said.
In November, the state auditor released a scathing report which criticized Hollywood for failing to plan for rising pension costs and not considering all available funding before declaring “financial urgency” in 2011.
That declaration led to employees’ salaries and jobs being slashed, and residents’ taxes and fees going up. The city eventually had to overcome a $38 million budget gap.
The city had until Dec. 26 to respond to the state audit.
Among Hollywood’s criticisms:
• The city would have needed a special act of the Legislature to make changes to its pension program;
• The state auditor underestimated the city’s budget shortfall by nearly $7 million.
• When citing the amount of money Hollywood could have carried over from one year to another, several figures were wrong, the city said.
• The report said the city raised the tax rate for the 2012-2013 fiscal year, which was an incorrect statement. Hollywood kept the rate at $7.4479 per $1,000 of assessed property value.
• When criticizing the city for the way it tracks its vehicle maintenance and fuel usage, the state auditor incorrectly used the number 750 vehicles. The city owns 1,042, according to Hollywood officials.
• The state audit suggested the city could have transferred $22.7 million from its water and sewer fund. But the city says most of the money was not cash in hand and could not be used to transfer to the general fund.
“They are suggesting that the city had this secret stash of money we could have used to avoid the negative financial situation,” Sheffel said. “That is not the case.”
In addition, the state audit was based on a time period before the city made changes, Sheffel said.
“There several instances where the auditor general pointed out things we had already recognized,” said Sheffel. “I do not believe there was anything we weren’t aware of.”
While the city shot down most of the state’s findings, it did make a few concessions. The city agreed there should be midyear financial projections given to the commission and produced electronically. It also agreed that new budget practices should be used for other city funds and that “timeliness of its bank reconciliation process’’ can be improved.
The city also agreed that the minutes from meetings could be approved by the commission more promptly.
Now the city has to wait for the auditor general’s office to complete its final report.
Marilyn Rosetti, an audit manager with the Florida auditor general’s office, said the state’s final report will likely be released sometime in January and the auditor will then follow up after that.
“The law requires within 18 months that we go back to determine the progress in addressing the findings and recommendations in this report,” she said.
Vice Mayor Dick Blattner said Thursday that the “city’s response is appropriate.”
“Most of what the auditor recommended has already been done or is in the process of being done,” he said. “I’ll be looking forward, with not much anxiety to the auditor’s response to our report.”