MERIDEN — A clerical error in the tax assessment for Eversource, the city’s largest taxpayer, led to approximately $3.4 million in uncollected revenue, city officials said this week.
The mistake in Eversource’s personal property tax assessments on the 2016 and 2017 Grand Lists affected how much the utility company paid the city 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.
”This is unprecedented,” City Manager Tim Coon said. “This is personal property. When you’re looking at electric and gas, it’s in the millions of dollars.”
The error was discovered just before Thanksgiving when Tax Assessor Deborah Zunda conducted a routine audit. Since then, the city has hired external audit firm Blum Shapiro to conduct a forensic review of the city’s personal property accounts going back three years. A full report is expected next week, Coon said.
The employees responsible for the error retired last year and the city has implemented internal controls to prevent the mistake from occurring again, he said.
“Some of the paperwork was filed differently in the past and clerical issues allowed it to move forward, Finance Director Mike Lupkas said about the error.
The Assessor’s Office is part of the annual audit, and there is a risk/reward assessment made when reviewing any department, Lupkas said.
“This typically would not be an item that would receive intensive review during an annual audit,” Lupkas said.
State statute gives the city a three-year window to issue corrected statements and request payment, Coon said, adding he’s been in talks with Eversource’s property tax manager and executive officers.
“They said they are reviewing it,” Coon said. “Eversource is working with us cooperatively on ways to resolve this.”
“As Meriden’s largest taxpayer, we’ve had discussions with city officials concerning the assessments and continue to work with them to clarify the amount of property taxes we are legally obligated to pay,” Eversource spokesman Mitch Gross said in a prepared statement.
City Council leadership met over the missing revenue last week. Finance Committee Chairman Brian Daniels said they discussed how to proceed.
“The city manager is having conversations with Eversource,” Daniels said. “It’s my expectation it will be resolved.”
The discovery of uncollected revenue comes after residents forced a referendum this past summer over an approved tax hike. Voters rejected the budget in July forcing city councilors to revisit the spending plan.
The council in August agreed to cut $1.4 million in spending from the rejected budget, a decision that led to the elimination of school resource officers in the elementary and middle schools — SROs were recently restored for middle schools — and the police department’s Neighborhood Initiative.
Daniels said he wouldn’t speculate on whether the availability of the additional funds would have meant a different outcome. “I don’t think anybody could assume things would be different,” he said.
City Council Minority Leader Daniel Brunet said he was confident that the city will reclaim the money, and added that Eversource may have known they were being under billed. “They know what they pay in any given year,” Brunet said.
He said the $3.4 million in missed revenues would have clearly had an impact on last year’s budget.
“But what’s key is, what we’re going to do with it?” Brunet also said. “We simply don’t want to restore and reinstate everything after every the effort that took place.”
Brunet pointed to cuts related to furlough days and 3-percent spending reductions for departments as examples of items he feels should remain. He also would not have supported restoring more than $65,000 for the school resource officers.
Instead, the additional revenue “should go toward no tax increase for next year,” Brunet said.
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