Auditors eyed as Mount Kisco reserve funds dwindle

By MARTIN WILBUR

Mount Kisco officials unanimously approved retaining the village’s current accounting firm to conduct the 2025-26 fiscal year audit despite deep reservations held by Mayor J. Michael Cindrich regarding the lack of debt and fund balance analyses.

The board voted to continue using Drescher & Malecki for the audit but also signaled that it intends to put out a request for proposal to search for other firms after the current fiscal year ends. Mount Kisco’s fiscal year runs June 1 through May 31.

The source of concern has been the plunge in the village’s reserve funds, most notably the unassigned fund balance, which dropped to about $2.65 million in the last audit from about $10 million in 2023, as well as a capital reserve drop-off from more than $3.5 million less than a decade ago to $964,000. 

While the village has borrowed significantly to tackle numerous capital projects to improve aging infrastructure and facilities along with navigating the pandemic, Cindrich said Drescher & Malecki failed to alert officials about the seriousness of the situation and did not run a requested analysis of the debt and fund balance.

In February, when the audit presentation was made to the board and the public, Drescher & Malecki did not know if the depletion would result in a credit rating downgrade, which occurred afterward.

At Monday evening’s board meeting, Cindrich read an Aug. 9 letter that he wrote to the board and the Finance Committee expressing his concerns about the village’s fiscal health, having raised warnings about using capital reserves to balance the operating budget in 2023, when he returned as mayor.

“During my tenure as mayor, I never had a downgrade of the village’s credit rating, and while I consider the downgrade insignificant, I’m concerned about the future,” Cindrich said in his letter. “I can’t reconcile with the last audit not highlighting the significant — emphasizing significant — decline in the capital reserves.”

Village Manager Ed Brancati said the reduction in reserves was a planned strategy so residents wouldn’t be hurt. He presented figures that showed how the rise in property tax revenue, for example, was $14,586,000 during the 2015-16 year and is currently at $16,813,000, an increase well below the rate of inflation. Spending has also been held in check when accounting for inflation, he said.

Limiting borrowing

There was also a conscious decision to use fund balance over the past couple of years to limit the level of fresh borrowing that was needed to pay for some of the projects.

“We are in the low point,” Brancati explained to the board about the reserves. “Every time we see the last fiscal year, current fiscal year, is the bottom and then we come up out of this as the library debt drops off. This is the last year of that payment.”

There is debt service of nearly $670,000 this year on the library renovation from 20 years ago, he said.

However, the village has completed or is close to finishing a significant level of other infrastructure improvements, such as renovation of the three firehouses, the addition and improvements to the DPW building, the streetscape, alterations to the courthouse building and police precinct, Village Hall improvements, the Legion Way culvert replacement, street paving and other projects.

“So, there’s a lot that’s been accomplished,” Brancati said. “There is still some work to do but we accomplished a significant amount of work, and this is just the general fund.”

To complete funding for outstanding projects, another $4 million will need to be borrowed, he said. But with the library debt expiring and the additional borrowing, debt service is expected to drop from $3,362,942 this year to $3,110,515 for 2027-28.

Trustee Heather Bryant said the auditor did include the issues with the debt and the declining reserves but didn’t provide the village with solutions.

A meeting with the board and the village’s Finance Committee should be scheduled so trustees can get a clearer picture of the village’s fiscal health, Trustee Tom Luzio said.

Cindrich said he would schedule a meeting with the committee and urged the rest of the board to take the fiscal challenge seriously.

“I’m not concerned about tomorrow; I’m concerned about three or four years from now,” he said.