By RICK MILLER
Olean Star
The Olean Common Council reviewed the independent audit of the 2024-25 city budget Tuesday amid concerns over the proposed 18.6% tax levy increase and an 11% sewer hike in the 2026-27 budget.
Mayor Amy B. Sherburne last week introduced a proposed $23.2 million general budget, a $3.4 million increase that carries a $3.31 increase in the tax rate to $21.06 per $1,000 assessed value. Soon after the proposed budget was filed, the city was notified of a $780,000 increase in its $260,000 Aid and Incentives to Municipalities or AIM program.
Christopher Zera, an accountant with R.A. Mercer & Co., listed eight deficiencies that included journal entries, reconciliation of the general ledger and capital projects, recordkeeping, unreconciled balances, capital assets, budget monitoring and reconciliation of sewer and water funds.
Zera said the city’s financial highlights include a $3.6 million increase in the city’s fund balances to $9.3 million. Also, the unassigned fund balance of $2.4 million from last year is equal to about 13.3% of general fund expenses. The council has a target of 15%, which had shrunk to 10% the year before.
Because revenues rose, the general fund ended with a $2.5 million balance. The Water Fund balance rose from $385,000 to $945,000 and the Sewer Fund balance increased from $3.1 million to $3.2 million.
Alderman John Crawford, D-Ward 5, said the mayor’s characterization of the budget process as in crisis, for which she blamed the former administration and the current council, was not based on fact.
He cited R.A. Mercer’s finding of a 13.3% fund balance in the general fund as of May 31, 2025 as evidence the city was on the cusp of its 15% target — not in financial crisis.
“I believe the public deserves accuracy, not exaggeration,” Crawford said. “Our independent auditors just confirmed that our financial statements are presented fairly, and our financial position is steady. I believe the results reflect a city operating with a manageable reserve, not a city in crisis.”
Crawford added: “While it is a large task to ask any new administration to jump right into preparing a budget within one month of taking office, it is imperative to stay grounded in financial data. An 18% tax increase and an 11% sewer increase are major proposals and burdens to our taxpayers and deserve justification based on facts – not generalizations. I hope we will see their data-driven projections in the coming weeks.”
Crawford said, “We all want the new administration to be successful, and it will be with the council’s help. We all want solid reserves, strong internal controls, and a sustainable budget for our residents. Given last June’s 6.2% tax increase and a 5% increase in water, I’d encourage us to see how this year plays out, building off last year’s positive audited results.”
He added: “Before we start yelling that the house is on fire, we should take a careful look at whether there’s actually smoke and how much. Regardless, it is unwise to frame our finances as a “crisis” if the data does not support that conclusion. Doing so only erodes the public’s confidence even more in its local government.”
Finance Committee Chairwoman Sonya McCall, D-Ward 4, said the proposed 18.6% tax levy hike and $11 sewer rate hike are “substantial increases.”
She said, “The Council takes very seriously the impact that these proposals would have on the residents of Olean. We are committed to working collaboratively with the mayor and department heads, but we are equally committed to reducing both the tax and sewer rates and limiting the financial burden placed on our community.”
McCall said the audit pointed out continued “material concerns regarding internal financial controls, including reconciliation of the general ledger and capital projects, bank reconciliations, record keeping, budget monitoring, and reconciliation of receivables.”
The Council, she noted, “repeatedly encouraged the previous administration to provide the necessary training to the auditor to correct these deficiencies. That training was not implemented, and as a result, these issues persisted throughout fiscal year 2024–2025.”
McCall encouraged the mayor to see the training plan “is implemented immediately with clear management oversight and accountability measures to ensure these deficiencies are corrected.”
McCall agreed with Crawford, that “Despite operational challenges, the city’s financial position has improved. Fund balances increased by $3.6 million over the prior year. The City realized a net increase of $4,646,478 in fiscal year 2025 as revenues exceeded expenditures. Bonded debt decreased by $410,900. These results reflect disciplined fiscal monitoring by the Council and the effectiveness of the spending freeze that was implemented.”
McCall also called for “full and fair compensation” with the Village of Allegany for treating the sewage from the village.
“Because these funds are disputed and unpaid, they cannot be recognized as an asset or receivable,” McCall said. “The council will not allow Olean residents to subsidize another municipality’s waste treatment.”
Ward 7 Democrat David Anastasia said even though the budget was late, the mayor should rework it to reflect the $780,000 in new AIM funding from the state. “It’s not an accurate document at this point.”
Council President Vernon Robinson Jr., I-Ward 6, said at this point it would be irresponsible to put the money in the budget before knowing if it will be the same amount next year.
The additional $780,000 would appear to reduce the tax rate to closer to 12%.
Robinson asked the mayor to explain why she sent a letter to non-profit groups that own tax-exempt property in the city without notifying the council.
Sherburne apologized for not giving the council a heads up and replied that the letter was an attempt to see if some groups would voluntarily make a payment. There’s a long list of tax exempt groups — including the railroad that runs through the city, she added.
The council president also asked why the budget, which the charter says will be delivered on Feb. 15, was delayed four days.
Sherburne said new budget software and dealing with two sets of auditors. As the Sunday deadline approached and some budget items did not match up, she said she made the decision to delay the budget.
“We did not want to give it to you without being accurate,” the mayor added.
The alderman will meet with Sherburne and department heads to review the budget starting Thursday at 6 p.m. The budget is due to be approved by April 15 and goes into effect June 1.
