Newcastle passes 2009 audit despite citizen concern

February 4, 2010

By Tim Pfarr

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Newcastle passed its annual audit in 2009 without trouble, although individual citizens expressed concern to the state auditor regarding the city’s finances.

Last year, Giles Velte — a Newcastle Trails Board member and former member of the Planning Commission — and Garry Kampen — president of Newcastle Trails — sent a 15-page letter to the State Auditor’s Office expressing concerns about the city’s long-term financial stability.

“Newcastle’s government is lacking in responsiveness, transparency and accountability,” the men wrote in the letter. “Resources have been wasted and the city’s financial viability is at risk.”

In the letter, the men expressed various concerns about the Coal Creek Parkway Project, operations at City Hall and the sports park project slated to take place at Southeast 95th Way. The men also expressed concerns about the city’s work with consultants, and the city’s parks, trails, transit center, incoming library and new signage.

“Our finances long term are troublesome,” Velte said in an interview. “The trend — because of neglect — is bad.”

In its 2009 final budget, the city forecasted that its year-end general fund balance would steadily decrease until reaching negative $203,693 by 2014. However, Velte expressed concern about a prior version of the 2009 budget, which forecasted the city’s year-end general fund balance to decrease until reaching about negative $3.7 million by 2014. He said this previous version of the budget was more reflective of the city’s financial state.

Last month, Audit Manager James Griggs sent a response to the men on behalf of the State Auditor’s Office.

“The city appears to be adjusting actual expenditure levels to actual revenue,” Griggs wrote in his letter, noting that the city has not used any funds from its Cumulative Reserve Fund, which the City Council must unanimously vote to use. This fund has about $1.5 million in it.

Griggs could not be reached for additional comment.

Velte said he plans to submit a follow-up letter to the State Auditor’s Office addressing his concerns. He also said the City Council’s latest action in cutting more than $1 million from the 2010 budget is being done as emergency action.

Assistant Audit Manager Evans Anglin said it cost the State Auditor’s Office $3,200 in staff time to review the letter. The city was required to pay for this expense, as the cities are required to pay for their own annual audits.

The 2009 audit examined Newcastle’s finances and records from 2008, as well as meeting minutes from 2009. Although the audit did not yield any findings or management letters — which are reflective of more serious problems — it did report three exceptions, which are reflective of less serious problems or discrepancies.

Two of the exceptions were very minor and regarded an insurance contract and travel expenses, but one exception regarded the Open Public Meetings Act, which was more serious.

Specifically, the state auditor was unable to find meeting minutes for the Aug. 5, 2009, meeting and the Sept. 2, 2009, meeting. However, City Clerk Bob Baker said this exception was the result of a small mix-up that has since been settled. The minutes for both meetings can be found on the city’s Web site.

It was also unable to determine whether the city notified its official newspaper— The Seattle Times — of a public hearing that took place Feb. 13, 2008. Finally, it found that meetings on May 5 and Aug. 18, 2009 convened to executive session without giving an estimated duration, which is required.

Councilman and Finance Committee member Sonny Putter said he was pleased that the audit did not yield findings or management letters.

“Those are very positive results,” he said. “It shows that the city’s financial statements accurately portrayed the financial state of the city.”

Director of Finance Christine Olson also said the audit went well.

In the city’s 2008 audit, workers from the State Auditor’s Office filed a management letter because the city prepared its schedule of expenditures of federal awards incorrectly. That issue, as well as issues that resulted in three exceptions in the 2008 audit, were corrected in 2009.

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