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Objective of Budget Review

The objective of the review was to provide an independent evaluation of the Town of Wallkill’s (Town’s) fiscal year 2026 adopted budget.

Background

The Town’s fiscal year 2026 adopted budget totals $47,867,327. Our review addressed the following question related to the Town’s current fiscal year budget:

• Were the significant revenue and expenditure projections in the Town’s adopted budget reasonable?

Because the Town did not have complete, accurate and current accounting and financial records, our ability to determine the reasonableness of the Town’s significant revenue and expenditure projections was limited. Overall, we determined that significant revenue and expenditure projections in the adopted budget were not always reasonable or supported. The Town’s adopted budget for fiscal year 2026 risks negatively impacting the Town’s financial condition and putting the Town in a declining financial position.

Key Findings

• The 2026 adopted budget includes appropriated fund balance totaling $2.2 million in the general fund and $993,111 in the water and sewer funds. Due to our concern that the records were not up to date and there was no recent audit, it is unclear how officials determined how much fund balance was available to appropriate.
• The Town anticipates receiving $4.0 million in one-time State aid, which was awarded subsequent to the budget adoption. However, no timeline for the distribution of the aid was established. Additionally, it is unclear whether there will be restrictions on how the Town can use the funds.
• The 2026 adopted budget did not include appropriations for principal and interest payments on the 2026 bond anticipation note (BAN) renewal. Furthermore, during 2024 and 2025, the Town paid $2.7 million in BAN principal and interest payments that were not budgeted for across all funds. As a result, the Town underestimated the budget for debt payments by approximately $1.8 million.
• The Town has approximately 50 tax certiorari claims composed of both commercial and residential claims. The Town’s 2026 adopted budget includes an appropriation of $40,000; however, the Town received a judgment for an ongoing claim of approximately $600,000 which was not included in the budget. Therefore, Town officials may have underestimated tax certiorari appropriations by approximately $560,000.
• The 2026 adopted budget includes an appropriation of approximately $876,000 for Social Security and approximately $215,000 for Medicare. Based on the total payroll budget of approximately $18.9 million, Town officials should have budgeted approximately $1.2 million for Social Security, and $274,000 for Medicare. Therefore, Town officials may have underestimated Social Security by approximately $295,000, and Medicare by approximately $58,000.

Key Recommendations

1. The Board and Town officials should work with the Comptroller to determine current fund balance levels and develop a plan to maintain fund balance at a reasonable level to ensure funds are available in case of unanticipated expenditures or a shortfall in revenues during the fiscal year.
2. The Supervisor should make updating and correcting the Town's accounting records and completing all outstanding bank reconciliations a priority to ensure the Board has complete, accurate and timely financial information to monitor the Town's finances and make informed decisions.
3. The Supervisor should work with State officials to determine expected timing on anticipated one-time revenues, such as State aid, as well as any restrictions on the funds’ use.
4. The Comptroller should ensure the Town’s debt schedule is updated and includes all of the Town’s debt, including BANs.
5. The Board and Town officials should monitor tax certiorari, Social Security, and Medicare expenditures closely throughout the year to ensure the budgeted appropriation is sufficient.