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The Neighborhood Companies Fund in Harrisburg must be audited | PennLive letters – pennlive.com

By H. Ralph Vartan

The City of Harrisburg has a looming problem: its Neighborhood Services Fund is on a path to insolvency.

Created in 2016, the NSF is, in simple terms, the city’s trash and recycling business. It accounts for the revenues and expenses associated with refuse collection and disposal.

From 2020-2024, the fund is projected to decline from a beginning balance of $7.7 million to an ending balance of $1.1 million – i.e., expenditures are projected to exceed revenues by $6.6 million.[1] At that rate, the fund will go broke in another year.

This is based solely on projections prepared by city management.

Making matters worse, the projections obscure the full cost of administering the business activities in the NSF.

The NSF shares overhead with the city’s General Fund – that is to say, taxpayers. However the NSF temporarily stopped reimbursing the General Fund for a share of its overhead. In other words, taxpayers are subsidizing it.

The Intergovernmental Cooperation Authority for Harrisburg raised these concerns last year and sought cooperation from the city in addressing them. Instead, the city rebuffed us and tried to spin the make-believe that the fund is balanced. Taxpayers and ratepayers deserve better than that.

There are other serious problems with the financial management of the NSF.

In 2018 the city wrote off approximately $9 million in receivables on delinquent sanitation and disposal accounts.The 2019 audit, due to be released in February, is expected to include a restatement for a prior period, due to a material misstatement related to receivables in the NSF.City management provided us with a faulty report on revenues and expenses related to outside services to the Borough of Steelton. It seems to have overstated net income by hundreds of thousands of dollars.

To assess the full scope of problems with, and restore credibility to, the financial management of the NSF, an independent examination is now needed.

The Intergovernmental Cooperation Authority for Harrisburg is acting to engage professional services to address the budgetary affairs, make factual findings, and provide recommendations associated with the Neighborhood Services Fund.

We call upon the city administration to give us full transparency and cooperation in examining these issues.

H. Ralph Vartan is Vice-Chair, Intergovernmental Cooperation Authority for Harrisburg.

[1] City of Harrisburg’s proposed Five-Year Financial Plan submitted to the Intergovernmental Cooperation Authority for Harrisburg, dated December 14, 2020.

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