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Audit of Benton Harbor shows city spent less, had problems

BENTON HARBOR, Mich. - After the city’s first full year with an emergency manager Benton Harbor isn’t spending as much money as it used to but the is still massively in debt. During the 2011 fiscal year Benton Harbor spent more money than it made.

An independent audit of the city’s finances was done for the year dating from July 2010 to June 2011. The state is reviewing the audit.
The report shows that Benton harbor is on the right track, slashing its general fund, but there are some major deficiencies outlined by the auditors.
In 2011, Emergency Manager Joseph Harris managed to cut the operating costs of city significantly. Benton Harbor reduced its debt by almost $1.3 million from 2010 despite losing almost a $500,000 in state funding.
There are weak spots in the report. Benton Harbor still spent more than it took in.
In 2011, the city only made $9.2 million but spent more than $9.5, spending nearly $400,000 it didn’t have.
2012 could see an overall surplus. Since the audit period, Benton Harbor’s police and fire departments were merged and the city underwent layoffs.
Problems
In 2011, Benton Harbor managed to violate state and federal regulations.
The city was fined for not paying the IRS more than $400,000 it owed.
At the time of the audit the city still needed to pay about $1.7 million in back taxes to local entities.
The report also says Benton Harbor lost out on $200,000 because it forgot to charge local entities for fire protection sprinklers.
The report shows a full year under Harris’s management but only three of those months since his power over the city expanded under Public Act 4.
Will next year’s budget reveal the same deficiencies? Or will the presence of an emergency manager finally get the city out of the debt.
Despite numerous phone calls and emails, Harris could not be reached for comment Friday.

You can read the full audit here.

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