Town of Canajoharie – Budgeting and Allocating Sales Tax Revenue (2021M-204)

Issued Date
March 04, 2022

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Audit Objective

Determine whether Town of Canajoharie (Town) officials properly budget for and allocate sales tax revenue.

Key Findings

Town officials did not properly budget for and allocate sales tax revenue. As a result, Town taxpayers residing outside the Villages did not receive all the benefit they should have from County sales tax distributions.

  • The Town Board (Board) underestimated sales tax revenue in the town-outside-village (TOV) general, TOV highway and town-wide (TW) highway funds by an average of $83,477 (21 percent) for fiscal years 2018 through 2020.
  • During fiscal years 2018 through 2021, the Board improperly allocated sales tax revenue totaling $253,603 to the TW highway fund before reducing the TOV funds’ tax levies to zero. The same amount of taxes were unnecessarily levied in TOV funds, creating taxpayer inequities.

Key Recommendations

  • Use realistic sales tax revenue estimates when developing budgets.
  • Allocate sales tax revenue to eliminate unnecessary levies on the TOV area.
  • Consult with legal counsel to determine remedies available to address taxpayer inequities.

Town officials generally agreed with our recommendations and indicated they planned to initiate corrective action.