BUFFALO, N.Y. (WKBW) — The Erie County Comptroller's Office released another audit regarding the Mortgage Tax Revenue and Collection Division for the Erie County Clerk’s Office. This audit comes months after another audit found more than $300,000 was missing from the office.
The audit said, "While testing mortgage tax expenses in the prior Clerk's Office audit dated June 2023, the Auditor found variances between and among numerous reports throughout 2022 that the Clerk's Office uses to collect and distribute mortgage tax revenue. Because many aspects of the Clerk's mortgage tax procedures were outside the scope of the prior audit, the Auditor expanded and separated the collection and distribution of mortgage tax revenue into a second subsequent audit."
Comptroller Kevin Hardwick said his office found that money was not distributed or not distributed properly.
"What we were able to find is that there are a lot of errors," Hardwick said.
When a mortgage tax is collected from the Clerk's office it goes to three entities:
- cities, towns and villages
- State of New York Mortgage Agency
- NFTA
The audit — which only examined only a handful of thousands of mortgage transactions — raises concerns over financial control in the clerk's office.
"So it's kind of a mess and at some point, you got to sort out that mess," Hardwick said.
The findings also point to discrepancies for several tax districts including the City of Buffalo. Fillmore District Council member and Finance Chair Mitch Nowakowski said he was dismayed by these findings.
"Money in money out and when you are paying in tax, you will see your tax dollars to work and you should see it work. You shouldn't see that there's ambiguity to not know where it's going through an audit," Nowakowski said.
Nowakowski sent a letter to the Clerk's office about his concerns.
The audit reveals that the city was underpaid roughly $6,600 in 2022. It shows Lancaster, the Tonawandas, Grand Island and Cheektowaga were also underpaid. Hamburg was noted to be overpaid.
"I think the biggest issue that people should know is the ambiguity that exists in the audit," Nowakowski said.
Erie County Clerk Mickey Kearns said he believes there are errors in the audit.
"I don't think some of the municipalities are going to shut down over some of the amounts that they may be owed but we don't know. And I can't comment on it, because they won't give us the paperwork," Kearns said.
Kearns said he asked the Comptroller's office to provide additional documents that show how the auditor came to these conclusions.
"As soon as we get that documentation, we'll be able to look at their findings and say, 'Okay, this is what we have. This is what they have,'" Kearns said. "I looked at the data every day, and we're going to do our best to represent the taxpayers. We strive for perfection."
The audit also found that the Clerk’s office was late in distributing money to the NFTA in 2022.
The NFTA sent the following statement:
The NFTA can confirm the Erie County mortgage tax revenue quarterly payments have been late on several occasions. The mortgage recording tax funding is critical to our daily operations. This funding is vital in keeping our fares affordable which the NFTA has been able to accomplish through stringent cost controls and efficient operation of the transit system by the NFTA. We look forward to a timely resolution of this matter.
"I think that the taxpayers should be concerned that there are problems from time to time in county departments, and in particular, in this case, the Clerk's office," Hardwick said.
Hardwick is calling for a full forensic audit from a third party, but Kearns said that is not necessary and the Comptroller's office should conduct that.
You can read the full audit here.
