MERIDEN — City officials expect the results of an audit, ordered after the discovery of errors in assessments of Eversource Energy equipment, will be released “any day now.”
The city hired the accounting firm Blum Shapiro to conduct a forensic review of the city's personal property accounts after discovering the error, which resulted in the city not collecting $3.4 million in tax revenue from Eversource, the city’s largest taxpayer.
The audit will tell the city whether similar errors were made and whether additional revenue has gone uncollected. City Manager Tim Coon said Wednesday afternoon that the city expects the report will be released “any day now.”
The mistake in Eversource's personal property tax assessments on the 2016 and 2017 Grand Lists affected how much the city billed the utility company for tax bills on both its gas and electricity operations. According to Finance Department records, Eversource was only assessed on $124.9 million in property, instead of $210.3 million, over the two years.
The error, which affected payments for the 2017 and 2018 fiscal year budgets, was discovered just before Thanksgiving when Tax Assessor Deborah Zunda conducted a routine audit.
Coon said the decision to hire the firm was made during a private meeting last month with Finance Director Michael Lupkas, Mayor Kevin Scarpati, Council Majority Leader David Lowell, Council Minority Leader Dan Brunet and Brian Daniels, chairman of the City Council's Finance Committee.
Lupkas said the city expects the audit will cost between $5,000 and $8,000. Expenses above $25,000 require a formal bid process.
“It was a minor cost that’s coming right out of our audit line that's already in the budget,” Coon said.
Coon said the city did not make the public aware of the issue initially because officials wanted to gather information and negotiate with Eversource to recoup the lost revenue. The Record-Journal reported about the issue last week.
“The primary reason why (the city didn’t inform the public initially) is we didn't want to negotiate with Eversource in public,” Coon said. “We needed to get a sense of what happened and what the issue was and what caused it. … We wanted to work with Eversource to get their position on what they were going to do and not put them in a corner where they felt we were trying to make them the bad guys.”
Coon said the city planned to eventually inform the public of the issue.
“Right from the get-go, we were going to engage the public,” he said. “We were just trying to gather information.”
The discovery of uncollected revenue also came after residents forced a budget referendum for the first time in recent history because many residents felt the budget’s tax increase, about 4.5 percent, was too high. The council trimmed about $1.4 million from the budget following the referendum, including cuts to the police department that led Police Chief Jeffry Cossette to eliminate some positions in the School Resource Officer and Neighborhood Initiative programs.
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